Monday, Stephens raised the price target on Itron (NASDAQ:ITRI) shares to $110 from $85, maintaining an Equal Weight rating.
The adjustment follows Itron's first-quarter 2024 performance, which surpassed expectations in terms of revenue and adjusted earnings per share (EPS). Itron's revenue reached $603 million, notably higher than the anticipated $580 million by both Stephens and the consensus. The adjusted EPS was reported at $1.24, exceeding the forecasted $0.85 and $0.84.
Today, the company's shares experienced approximately a 9% increase in response to the earnings announcement and the guidance for the second quarter of 2024, which is also above consensus. The positive market reaction is attributed to factors such as the high demand for electricity due to an increasingly stressed grid, further strained by the rise of artificial intelligence and data center adoption.
Analysts predict that Itron's share price will stabilize above $100 in the near term. This expectation is based on the company's strong and improving performance, normalization of supply chain dynamics, and evidence of robust underlying demand, with a book-to-bill ratio expected to exceed 1.0x in 2024.
The revised price target of $110 reflects an approximately 19x enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple for the year 2024. The increase in the implied multiple is due to the rapidly improving earnings power and the market's keen interest in sectors associated with data center and AI trends.
Itron is considered to be in a favorable position to assist utility customers in managing the anticipated surge in future load growth. The Equal Weight rating has been reiterated, and the financial model has been updated accordingly.
InvestingPro Insights
Following the positive earnings report and Stephens' price target increase, Itron (NASDAQ:ITRI) has shown remarkable performance metrics. With a market capitalization of approximately $4.91 billion and a strong revenue growth of 25.77% over the last twelve months as of Q1 2024, the company's financial health appears robust. The revenue growth underlines Itron's ability to capitalize on the high demand for electricity and the role it plays in the evolving energy grid landscape.
An InvestingPro Tip highlights that seven analysts have revised their earnings upwards for the upcoming period, indicating a bullish sentiment on the company's future performance. Additionally, the stock is trading near its 52-week high, with a price that is 99.91% of this peak, suggesting investor confidence is at a high. The significant return over the last week, month, three months, and year, with respective figures of 12.68%, 16.95%, 47.3%, and 56.22%, reflects the market's positive reaction to Itron's strategic positioning and operational efficiency.
For readers looking to delve deeper into Itron's financials and future outlook, InvestingPro offers additional insights. There are 13 more InvestingPro Tips available to help investors make well-informed decisions. To access these valuable insights, visit https://www.investing.com/pro/ITRI and consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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