APi Group (APG, Financial) has received an upgraded rating from JPMorgan, moving to Overweight from Neutral. The financial institution has also raised its price target for the company to $42, up from the previous $31. This optimistic shift follows discussions with APi's management, leading JPMorgan to express increased confidence in the company's strategic execution.
JPMorgan highlights APi Group as a "capital-light, cyclical resilient" business platform. The firm anticipates a re-evaluation of the company's worth as its underlying fundamentals strengthen, coupled with more apparent margin expansion. This enhanced confidence reflects a positive outlook for APi Group's future growth and performance in the market.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 10 analysts, the average target price for APi Group Corp (APG, Financial) is $38.61 with a high estimate of $52.11 and a low estimate of $34.00. The average target implies an upside of 11.92% from the current price of $34.50. More detailed estimate data can be found on the APi Group Corp (APG) Forecast page.
Based on the consensus recommendation from 11 brokerage firms, APi Group Corp's (APG, Financial) average brokerage recommendation is currently 1.7, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for APi Group Corp (APG, Financial) in one year is $21.19, suggesting a downside of 38.58% from the current price of $34.5. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the APi Group Corp (APG) Summary page.
APG Key Business Developments
Release Date: May 01, 2025
- Revenue: Increased 7.4% to $1.72 billion compared to $1.6 billion in the prior year period.
- Organic Growth: Approximately 2% driven by pricing improvements and strong growth in safety services.
- Adjusted Gross Margin: 31.7%, a 100 basis point increase compared to the prior year period.
- Adjusted EBITDA: Increased by 10.3% with a margin of 11.2%, a 30 basis point increase compared to the prior year period.
- Adjusted Diluted Earnings Per Share: $0.37, an 8.8% increase compared to the prior year period.
- Safety Services Revenue: Increased by 13.4% to $1.27 billion with 5.6% organic growth.
- Specialty Services Revenue: Decreased by 6.8% to $453 million with a 6.6% organic decline.
- Adjusted Free Cash Flow: $86 million, a $74 million improvement compared to the first quarter of 2024.
- Net Leverage Ratio: Approximately 2.3 times, below the long-term target of 2.5.
- Share Repurchase: $75 million or 2.1 million shares repurchased in the first quarter.
- Full Year Revenue Guidance: Increased to $7.4 billion to $7.6 billion, representing 2% to 5% organic growth.
- Full Year Adjusted EBITDA Guidance: Increased to $985 million to $1.035 billion, representing over 10% growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- APi Group Corp (APG, Financial) reported a 7.4% increase in revenues for Q1 2025, reaching $1.72 billion, driven by pricing improvements and strong growth in safety services.
- The company achieved a 100 basis point increase in adjusted gross margin, reaching 31.7%, due to disciplined customer and project selection and value capture initiatives.
- APi Group Corp (APG) saw a 10.3% increase in adjusted EBITDA, with a margin of 11.2%, reflecting successful margin expansion strategies.
- The safety services segment experienced a 13.4% revenue increase, with organic growth of 5.6%, driven by double-digit inspection revenue growth in North America.
- APi Group Corp (APG) announced a new $1 billion share repurchase program, demonstrating strong free cash flow generation and balance sheet strength.
Negative Points
- The specialty services segment reported a 6.8% decrease in revenues, impacted by adverse weather conditions and lower fixed cost absorption.
- Despite overall growth, the adjusted gross margin for the specialty services segment decreased by 150 basis points due to lower net revenues.
- APi Group Corp (APG) faces potential impacts from tariffs, particularly in the project revenues and US life safety sectors, which could affect material costs.
- The company anticipates a modest decline in specialty services margins for the full year, with a return to accretive margins expected in 2026.
- APi Group Corp (APG) is managing risks associated with the rural broadband program, which is described as 'choppy' and could impact revenue forecasts.
