CTOS Stock Forecast & Price Target

Custom Truck One Source is well positioned because demand across its transmission-led utility end markets remains exceptionally strong, with management reporting no slowdown, improved visibility into multiple years of projects, and even datacenter developers requesting on-site technicians and parts to avoid equipment bottlenecks. Its higher-margin ERS platform is showing durable economics, with utilization at 81.6%, average OEC on rent of $1.37 billion, and management expecting adj. EBITDA margins to stay in the low-50s through 2H26, supported by rental gross margins in the mid-70s and about a 5% rental price increase that is still rolling through. The company also appears set up for improving cash flow and deleveraging as pricing tailwinds, transmission mix benefits, and a manageable 2027 emissions-related cost increase of roughly $4,500-$7,000 per chassis should flow through to customers rather than impair demand.

Custom Truck One Source is viewed negatively because its earnings remain exposed to volatile Electrical T&D demand, project-timing swings, regulatory and rate uncertainty, and supply constraints on Class 8 chassis and components that can disrupt revenue and margins. Despite management guiding to $50mn+ of FY26 levered FCF and net leverage declining to 3.85x in 2Q from 4.02x in 1Q and 4.31x at year-end 2025, the turnaround still depends on inventory reduction, higher utilization, and steady fleet deployment after prior earnings misses. The company also faces elevated competitive, technological, and governance risks, including concentrated shareholding near 70% by Platinum Equity and a CEO change in March 2023, which could amplify execution risk and pressure the stock.