2023-07-28 09:58:41 ET
Parsons ( NYSE: PSN ) on Friday was upgraded to Buy from a previous investment rating of Hold by analysts at Truist Securities. They said the defense and engineering contractor is poised for gains with a global rise in infrastructure spending.
“Parsons ( PSN ) primarily performs front-end design and engineering work, which should benefit from increased spend in the early stages of an investment wave,” Tobey Sommer, analyst at Truist, said in a July 28 report.
Truist estimates spending will peak in the next few years from the Infrastructure Investment and Jobs Act signed by President Joe Biden in 2021 and Saudi Arabia’s Vision 2030 program to diversify its economy away from oil revenue.
Parsons’ “critical infrastructure segment could grow at a 7%-10% organic compound annual growth rate from 2023 to 2025, driven by increased IIJA spending in the United States (approximately 55%-60% of segment revenue) and Vision 2030 projects in Saudi (about 25% of segment revenue),” according to Truist.
The firm raised its price target for Parsons ( PSN ) to $60 a share from $50 a share previously, assuming an enterprise value-to-EBITDA multiple of 15 times for 2024 estimates.
“A relative premium to the group average should be merited given Parsons’ ( PSN ) attractive infrastructure mix, margin expansion opportunity and above-average organic growth prospects over the next three to five years,” Truist said.
More about Parsons
- Parsons to design Texas Interstate Highway 14 expansion
- Boeing, Spirit AeroSystems are key picks at Goldman Sachs for Q2 earnings
- Parsons to lead design on $1.2B contract awarded to Skanska-Halmar JFK JV
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Parsons upgraded to Buy at Truist Securities on infrastructure outlook