Aecom (ACM) has been rated a "Buy" by Citi, with a target price of $127, reflecting confidence in the company's solid execution and backlog visibility, which are expected to drive earnings growth in FY25. The report highlights Aecom's strong FY1Q25 results, with adjusted EPS of $1.31, surpassing both Citi and street estimates due to favorable tax and interest impacts. Aecom has modestly raised its FY25 EPS guidance to $5.13, supported by durable long-term demand trends both domestically and internationally.
Citi remains optimistic about Aecom's project pipeline, particularly in its highest-margin segment, fueled by the Infrastructure Investment and Jobs Act (IIJA). The report also notes Aecom's impressive international book-to-bill ratio, maintaining a ~1.2x for two consecutive quarters, indicating robust long-term growth opportunities. The company's Water & Environment Advisory Business is seen as a significant growth driver, with potential in digital water end markets and non-revenue water loss opportunities.
Citi's model update reflects an increase in FY25E/FY26E adjusted EBITDA to $1,185 million and $1,276 million, respectively, maintaining the target price based on a ~14x EV/EBITDA multiple. The report underscores Aecom's healthy balance sheet and strong free cash flow generation, which are expected to support multi-year earnings growth through strategic investments and share repurchases.
As of February 4, 2025, Aecom's stock was trading at $105.02, with a closing price of $104.18, up 0.32% from the previous close.