Primoris (PRIM): Upgrading to Neutral as expectations reset, but visibility still limited

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Primoris (PRIM): Upgrading to Neutral as expectations reset, but visibility still limited

Goldman Sachs Primoris (PRIM)

normalized 10–12% target range (to 7.6% in 1Q26 and -1% in 2Q26E on our estimates).

At 1Q26, PRIM had identified the six Solar projects—all bid in 2024—with cost overruns.

However, the magnitude of cost-to-complete estimates has remained a moving target,

with management most recently revising them higher on June 22, 2026. Management

has attributed the underperformance to execution issues, including gaps in

pre-construction planning and challenges entering new geographic labor markets during

a period of rapid Solar growth.

To address these issues, PRIM has implemented leadership changes (departure of the

President of Renewables on June 8, 2026 and the Chief Operating Officer on June 22,

2026) and added resources in pre-construction, estimating, and project management.

From here, the key questions are whether these projects face further cost overruns or

delays, and whether similar issues could emerge across a broader set of projects. While

PRIM has indicated these overruns are primarily limited to the six identified projects,

which are expected to be substantially complete by 2026, we remain cautious on the

extent and duration of Renewables headwinds given the magnitude of the guidance

revision, recent leadership changes, and evolving project updates. We forecast Energy

gross margins recovering to 10% by 2027 as the six problem Solar projects roll off,

though we have limited conviction on the timing of stabilization given the risk of

additional overruns beyond those identified to date. Overall, we forecast total company

EBITDA margins of 6.5%/6.5% in 2027/2028 vs 3.7% in 2026, with expansion driven