Infrastructure Construction Company MasTec Is Poised For Double Digit Margin Expansion, Analyst Says

Shares of MasTec Inc (NYSE:MTZ) continued their upward trajectory in early trading on Tuesday, after climbing last week on the company's raised 2024 adjusted earnings guidance.

Despite the recent rally, the stock has more runway. The Coral Gables, Florida-based company's Power Delivery, Clean Energy & Infrastructure (CE&I), and Communications segments are "turning the corner," according to Truist Securities.

Analyst Jamie Cook upgraded the rating for MasTec from Hold to Buy, while raising the price target from $133 to $173.

The MasTec Thesis: The company's Power Delivery, CE&I, and Communications segments are poised for revenue growth and margin expansion, Cook said in the upgrade note.

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MasTec is "solidifying its positioning in utility transmission and distribution through the Henkels & McCoy acquisition and in renewables through the IEA acquisition," the analyst stated.

The company and rival Quanta Services Inc (NYSE:PWR) are both "well positioned to lead the market and grow given competitive advantages which include scale, workforce, and balance sheet," he added.

"We expect strong top line growth and margin expansion in 2025 tied to secular growth in renewables, significant funding for communications infrastructure associated with BEAD funding and MTZ's recently expanded relationship with AT&T (NYSE:T), and new major project wins including the $1.5 billion high-voltage transmission project MTZ announced last quarter," Cook wrote. After facing two years of margin pressure, MasTec seems poised for margin expansion in 2025 and "has line of sight to reaching double-digit EBITDA margins over the medium term," he further said.

Price Action: Shares of MasTechad risen by 3.22% to $136.87 at the time of publication on Tuesday.

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