MKM Partners Reiterates Buy as Chicago Bridge & Iron (CBI) Shares Continue to Slip
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MKM Partners reiterated a Buy rating and $42.00 price target on Chicago Bridge & Iron (NYSE: CBI) as shares continue to under perform. The stock is down 27% since the lawsuit with Westinghouse was filed in July, the court date is scheduled for November 7. CEO Philip Asherman sold 468k shares of his over 1 million share position over a five day period in August, at a time where the stock was trading near 52-week lows, and which was only a few weeks after the lawsuit filing.
Analyst Daniel Scott commented, "CBI has underperformed the broader market badly since the lawsuit with Westinghouse was filed on July 21. The stock is down 27% in that time, compared to the S&P 500 down less than 1%. That lawsuit has a $2 billion headline number that Westinghouse is seeking from CBI for working capital adjustments from the time the nuclear deal was signed to the time it closed. CBI by contrast is seeking payments for work performed during that time of $428 million. The court date is scheduled for November 7, where a number of things could occur. A ruling in CBI's favor would force Westinghouse to use the numbers and methods CBI believes are outlined in the original deal to rework their number. A ruling in Westinghouse's favor would effectively put the dispute out of the courts for contract law and into arbitration, where CBI would have to argue first the contract law of the deal and then why Westinghouse's numbers and assumptions are wrong. The ruling could come the day of the hearing, or could take some time, and could even require a prolonged hearing with more filings. An early 1Q17 resolution seems to be the best case, although the ruling one way or the other in November is a must watch."
Shares of Chicago Bridge & Iron closed at $27.15 yesterday.
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