(Bloomberg) -- Primoris Services Corporation (NYSE: PRIM) is facing investor lawsuits after a stunning 50 percent stock collapse on May 6 revealed that problems in its renewable energy business were far more extensive than previously disclosed.
The sell-off, which erased approximately $5.5 billion in market capitalization, has prompted shareholder rights firms including Holzer & Holzer LLC and Hagens Berman to investigate whether the company and its executives violated federal securities laws by misleading investors. "We're focused on when Primoris' management learned of the renewable project execution issues revealed on the May earnings call," said Reed Kathrein, the Hagens Berman partner leading the firm's investigation.
The catalyst for the collapse was the company's first-quarter 2026 financial results, reported after the market closed on May 5. Primoris reported adjusted earnings of 59 cents per share on $1.6 billion in revenue, missing consensus estimates of 84 cents and $1.73 billion, respectively. The core Energy segment saw revenues fall 13.8 percent year-over-year, with gross profits plunging by nearly 40 percent.
During a May 6 earnings call, CEO Koti Vadlamudi attributed the miss to cost pressures across multiple solar projects, citing a range of "execution-related factors" including labor issues, project redesigns, and weather disruptions. This explanation stood in stark contrast to statements made in February 2026, when management attributed margin pressure to "difficult soil and rock conditions" at what they later implied was a single project. The expanded scope of the problems shattered investor confidence.
Despite the significant guidance reduction and the stock's collapse, some analysts believe the market reaction was excessive. KeyBanc analyst Sangita Jain, while lowering the firm’s price target to $137 from $179, maintained an Overweight rating. Similarly, Roth Capital lowered its target to $150 but kept a Buy rating, arguing the rest of the business remains healthy.
The investigations focus on the disparity between the company's February and May disclosures. Primoris, which generated nearly two-thirds of its 2025 revenue from the Energy segment, now must navigate these legal challenges while trying to complete the six troubled solar projects in 2026.
The sharp decline puts the stock at its lowest since late 2025, creating a new baseline for the embattled infrastructure company. Investors will be closely watching for updates on the troubled projects and any signs of margin recovery in the company's second-quarter results.
This article is for informational purposes only and does not constitute investment advice.
