On Monday, RBC Capital initiated coverage on shares of TechnipFMC Plc (NYSE:FTI:FP) (NYSE: FTI), a global oil and gas services company, with an Outperform rating and a price target of $37. This target suggests a roughly 30% increase from the current share price of $29.
The Outperform rating is supported by TechnipFMC's robust backlog and its proven ability to execute, which is expected to drive sustained returns for shareholders. The company is currently trading at a forward-year 2025 estimated EV/EBITDA multiple of 7.5x, which is slightly below its five-year average multiple of 8.5x. This is also below its post-Technip Energies average multiple of around 10.5x, reflecting the anticipated growth in margins and earnings.
TechnipFMC's historical performance indicates that the company should trade above its medium-term average multiple. This view is based on the company's track record of margin and revenue growth. Additionally, the potential conversion of its tender pipeline into firm orders is anticipated to further enhance the valuation of TechnipFMC, aligning it with RBC Capital's $37 price target.
The analyst from RBC Capital highlighted the company’s strong backlog and execution capabilities as key drivers for the optimistic valuation. These factors are seen as instrumental in boosting TechnipFMC's shareholder returns moving forward.
Investors and market watchers will be keeping an eye on TechnipFMC's stock performance and its ability to convert its tender pipeline into concrete orders, which could play a significant role in reaching the price target set by RBC Capital.
In other recent news, TechnipFMC has been in the spotlight due to its commendable Q3 results and an optimistic outlook. The company reported a revenue of $2.3 billion and an adjusted EBITDA of $389 million, with a record backlog of $14.7 billion. This performance was driven by significant Subsea orders, including a $2.5 billion contribution. Following the strong results, TechnipFMC raised its revenue guidance for 2025 and announced plans to double shareholder distributions.
In addition to its financial achievements, TD Cowen has shown confidence in TechnipFMC by raising its price target on the stock to $37.00 from $35.00, while maintaining a Buy rating. The firm's decision reflects TechnipFMC's consistent performance and its ability to surpass expectations, even in an unpredictable oilfield services market.
InvestingPro Insights
TechnipFMC's recent financial performance and market position align well with RBC Capital's optimistic outlook. According to InvestingPro data, the company's revenue growth of 17.82% over the last twelve months supports the analyst's positive view on execution capabilities. Moreover, the company's EBITDA growth of 58.39% in the same period underscores its improving profitability, which could justify a higher valuation multiple as suggested by RBC Capital.
InvestingPro Tips indicate that analysts anticipate sales growth in the current year, which aligns with the company's robust backlog mentioned in the article. Additionally, the tip that TechnipFMC is trading near its 52-week high corroborates the stock's strong performance and market confidence.
It's worth noting that InvestingPro offers 9 additional tips for TechnipFMC, providing investors with a more comprehensive analysis of the company's prospects. These insights could be valuable for those considering RBC Capital's Outperform rating and price target.
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