Custom Truck One Source Surges 13.5%: Analysts Predict 6.26% Upside

Custom Truck One Source (CTOS) stock surged 13.5% to $5.84, with analysts forecasting an average target price of $6.20, a 6.26% upside. The company reported strong financial performance, including a 13% YoY revenue increase for the ERS segment and a 14% growth in backlog. However, segment gross margin remains under pressure, and the company faces economic uncertainty due to evolving US tariff policies.

Custom Truck One Source (CTOS) stock surged 13.5% to $5.84 on Tuesday, with analysts forecasting an average target price of $6.20, a 6.26% upside. The company reported strong financial performance, including a 13% year-over-year (YoY) revenue increase for the Equipment Rental Solutions (ERS) segment and a 14% growth in backlog. However, segment gross margin remains under pressure, and the company faces economic uncertainty due to evolving US tariff policies.

The stock's performance was driven by a positive upgrade from Stifel, which raised its rating to Buy and increased its price target to $7.00 from $5.00 [1]. Stifel's upgrade was based on favorable transmission and distribution survey results, indicating improved equipment availability trends in the market. The survey revealed a net 2% of respondents saw tighter equipment availability in the second quarter of 2025, compared to a net 14% who saw looser availability in the first quarter [1].

Despite the recent earnings miss, CTOS reaffirmed its full-year 2025 guidance, projecting revenue between $1.97 billion and $2.06 billion and adjusted EBITDA between $370 million and $390 million [1]. The company's TES orders grew significantly by 220% year-over-year to $284 million, aligning with its revenue guidance for 2025.

However, the company faces several challenges, including segment gross margin pressure due to mixed inventory levels and hesitancy from smaller customers to purchase vehicles. Economic uncertainty due to evolving US tariff policies also poses a risk [1].

Custom Truck One Source's stock has shown strong momentum, with a 15.5% return over the past year. Despite the recent earnings miss, the company's positive outlook on rental utilization trends in the key Transmission and Distribution (T&D) market and rising optimism for Truck Equipment Sales (TES) orders support a more positive earnings outlook [1].

References:
[1] https://www.investing.com/news/analyst-ratings/custom-truck-one-source-stock-rating-upgraded-by-stifel-on-improving-equipment-availability-93CH-4134876