DA Davidson lifts Dycom stock target to $265 on growth outlook
Investing.com
Published May 24, 2025 07:54AM ET
On Monday, DA Davidson increased its price target on Dycom Industries (NYSE:DY) shares to $265 from $220, while maintaining a Buy rating. The firm's analyst cited stronger-than-expected contributions from recent acquisitions as a primary driver for Dycom's elevated first-quarter revenue and expanding margins. Additionally, the analyst noted that Dycom's annual growth guidance has been revised upward. This optimism is supported by recent performance metrics from InvestingPro , which show impressive revenue growth of 12.77% and six analysts revising their earnings estimates upward for the upcoming period.
Dycom's service offerings are seeing new opportunities, which are expected to bolster medium-term and long-term growth as well as operational leverage. The raised price target reflects a valuation of 13 times and 11 times the firm's fiscal year 2026 and 2027 EBITDA estimates, respectively. These estimates fall within the historical valuation range for Dycom's EBITDA, which has varied from 4 to 15 times the following year's EBITDA. Current EBITDA stands at $560.81 million, with the company maintaining a healthy current ratio of 2.89, indicating strong financial health according to InvestingPro 's analysis.
The analyst highlighted various external market drivers and internal initiatives that are enhancing Dycom's leverage to expansive market opportunities. These include the demand for last-mile fiber deployments, particularly in tier 2 and rural markets, upgrades to wireless infrastructure, and enhancements to middle-mile and long-haul fiber networks, as well as on-site data center infrastructure services. These markets are contributing to Dycom's current performance and are anticipated to continue driving growth in the future. The market has responded positively to these developments, with the stock showing a significant 15.59% return over the past week and trading near its 52-week high of $228.66.
Dycom has historically achieved EBITDA margins exceeding 17% in the early 2000s and more than 14% in recent years. Reaching these levels again could result in significant earnings per share growth. The analyst also pointed out that Dycom's focus on improving cash conversion should benefit the company's stock over the medium to long term. The firm remains positive on Dycom's prospects moving forward. For deeper insights into Dycom's valuation and growth potential, InvestingPro subscribers can access comprehensive financial health scores and 14 additional ProTips that provide valuable context for investment decisions.
In other recent news, Dycom Industries announced its fiscal first-quarter 2026 earnings, which exceeded expectations with an earnings per share (EPS) of $2.90, significantly higher than the forecasted $1.65. The company's revenue also outperformed projections, reaching $1.259 billion against an anticipated $1.19 billion. Following these results, Dycom raised its full-year 2026 revenue guidance to a range of $5.29 billion to $5.425 billion, indicating a growth range of 12.5% to 15.4%. Analysts from BofA Securities and JPMorgan have responded positively, raising their price targets for Dycom to $250, while UBS set a target of $258, all maintaining strong ratings on the stock.
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The company's recent acquisition of Black & Veatch has been a key contributor to its strong performance, particularly in the wireless business sector. Dycom has also benefited from its service and maintenance operations and the expansion of fiber-to-the-home projects. Additionally, Dycom's backlog has reached a record $8.1 billion, with significant awards from major customers like Verizon (NYSE:VZ) and Windstream.
Looking forward, Dycom anticipates continued growth in its service and maintenance business and potential opportunities from the Broadband Equity, Access, and Deployment (BEAD) program. The company remains confident in its ability to navigate market complexities, supported by its diverse operations and strategic focus on wireless infrastructure.
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Written By: Investing.com
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