JPMorgan Initiates Coverage of Argan with Neutral Rating and $220 Price Target

JPMorgan initiated coverage of Argan (AGX) with a Neutral rating and $220 price target, citing the company's potential to benefit from increasing US energy loads and a multi-year gas power plant buildout. However, JPMorgan believes the shares are fairly valued at current levels.

July 02, 2025 - JPMorgan initiated coverage on Argan (AGX) with a Neutral rating and set a December 2026 price target of $220.00. The investment bank views Argan, through its Gemma (EGX:ECAP) subsidiary, as a leading provider of engineering, procurement, and construction (EPC) services for large-scale gas and alternative fuel power plants [1].

According to InvestingPro data, Argan's stock has delivered an impressive 176.8% return over the past year, with the company maintaining strong financial health metrics. The company's solid financial position is evident in its strong balance sheet, with more cash than debt and revenue growth of 45% in the last twelve months [1].

JPMorgan expects Argan to benefit from increasing U.S. energy loads and a forecasted multi-year buildout of gas power plants, with the majority of the company’s growth likely coming from gas power plant construction [1]. The firm notes that Argan maintains material exposure to solar-plus-storage EPC and industrial construction, providing some diversification across end markets [1].

While JPMorgan believes the stock is fairly valued compared to EPC peers, it acknowledges Argan has experienced volatile trading within the AI data center theme despite growing visibility into future years, and could take a more constructive view following a significant pullback [1].

In other recent news, Argan Inc. reported strong financial results for Q1 FY2026, surpassing both earnings and revenue forecasts. The company achieved an earnings per share (EPS) of $1.60, which exceeded the expected $0.90, and generated $193.7 million in revenue, surpassing the forecasted $175.8 million. This represents a 23% increase in revenue year-over-year, with a significant contribution from the Power Industry Services segment. Additionally, Argan declared a quarterly cash dividend of $0.375 per share, marking a 50% increase over the past two years [1].

Argan’s project backlog stands at a record $1.9 billion, with expectations to exceed $2 billion in the coming months. The company continues to maintain a strong cash position with no debt, reflecting its robust financial health [1].

References:
[1] https://www.investing.com/news/analyst-ratings/argan-stock-initiated-with-neutral-rating-at-jpmorgan-on-power-plant-growth-93CH-4143046
[2] https://www.datacenterdynamics.com/en/news/elon-musks-xai-buys-former-gas-power-plant-site-in-southaven-mississippi/
[3] https://www.gurufocus.com/news/2989387/jp-morgan-initiates-coverage-on-argan-agx-with-neutral-rating--agx-stock-news
[4] https://ng.investing.com/news/analyst-ratings/argan-stock-initiated-with-neutral-rating-at-jpmorgan-on-power-plant-growth-93CH-2015641
[5] https://www.ainvest.com/news/talen-energy-surges-time-high-acquiring-power-plants-data-center-demand-2507/