Inside Quanta Services’ Newly Added Risk Factors

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Quanta Services (PWR) is an American multinational infrastructure solutions company. It designs, installs, and maintains the infrastructure systems for customers in industries including electric power, oil and gas, and communications.

Quanta’s earnings report shows revenue rose to $3.35 billion in Q3 2021 from $3.02 billion in the same quarter last year but missed the consensus estimate of $3.43 billion. It posted adjusted EPS of $1.48, which rose from $1.40 in the same quarter last year and beat the consensus estimate of $1.45.

The company plans to distribute a quarterly cash dividend of $0.07 per share on January 14 to shareholders of record as of January 4, 2022.

Quanta recently acquired Blattner for $2.7 billion. Founded in 1907, Minnesota-based Blattner provides project management and construction services to renewable energy developers.

With this in mind, we used TipRanks to take a look at the newly added risk factors for Quanta Services.

Risk Factors 

According to the new TipRanks Risk Factors tool, Quanta’s main risk category is Finance and Corporate, representing 38% of the total 50 risks identified for the stock. Production and Legal & Regulatory are the next two major risk categories, each accounting for 20% of the total risks, respectively. Quanta recently updated its profile with two new Finance and Corporate risk factors.

Quanta tells investors that it plans to commit substantial resources towards integrating Blattner into its existing operations. But it cautions that the integration process may experience difficulties that could prevent it from achieving the anticipated benefits of the acquisition. For example, it mentions that it could be confronted by currently unknown liabilities. Furthermore, the company mentions that management’s attention may be diverted and the ongoing business may be disrupted in the integration process.

Quanta cautions that the actual expenses related to the Blattner acquisition and integration may exceed its current estimates. Therefore, the transaction could end up having a much greater adverse impact on Quanta’s finances than anticipated.

The Finance and Corporate risk factor’s sector average is 36%, compared to Quanta’s 38%. Quanta’s stock has gained about 55% since the beginning of 2021.

Analysts’ Take

Following Quanta’s Q3 earnings report, Northland Securities analyst Gus Richard reiterated a Buy rating on Quanta stock and raised the price target to $149 from $129. Richard’s new price target suggests 33.18% upside potential.

Consensus among analysts is a Strong Buy based on 5 Buys and 1 Hold. The average Quanta Services price target of $137.17 implies 22.60% upside potential to current levels.

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