CTOS Stock Forecast & Price Target

Custom Truck One Source is viewed positively because its higher-margin specialty rental business is showing strong momentum, with 3Q revenue of $495.2mn, adj. EBITDA of $110.9mn, utilization above 81.5%, and SER adj. EBITDA margin of 54.6% driven by robust transmission and distribution demand. Management’s raised FY26 adj. EBITDA and SER revenue guidance, plus commentary on ~5% 2027 pricing increases and a larger fleet base entering 2027, suggests earnings can expand even with measured top-line growth. The improved backlog to $342mn, leverage down to 3.7x, and expectations for better cash conversion and below-3x leverage in 2027 support the case that CTOS is moving toward more durable profitability and deleveraging.

Custom Truck One Source is viewed negatively because its strong end-market demand has not yet translated into consistent quarterly performance, and earlier earnings misses have left investors wary of timing volatility. Although rental fundamentals improved considerably in 2025, any slowdown in utilization, weaker OEC on rent growth, or softer pricing could compress margins, while the STEM segment remains exposed to customer purchasing delays, tariff uncertainty, rates, and component shortages. High leverage further heightens risk, making inventory reduction, lower fleet investment, and stronger free cash flow conversion critical to meeting deleveraging targets.