MKM Partners Reiterates Buy on Chicago Bridge & Iron (CBI) Following Recent Weakness
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MKM Partners reiterated a Buy rating and $42.00 price target on Chicago Bridge & Iron (NYSE: CBI) following the company's recent weakness. MKM believes that the biggest overhang for the stock is the lawsuit between CBI and Westinghouse over true-ups to working capital changes that occurred between the signing of the nuclear deal last fall and the close in 1Q16.
Analyst Daniel Scott commented, "CBI shares have underperformed the peer group, down ~25% since the end of July when the company announced a pre-emptive law suit against Westinghouse (TOSBF, NR, $3.14) related to the nuclear deal closed early this year. Other peers have performed better, FLR (down ~4% [Neutral, $51.37, $52 PT]), JEC (roughly flat [Neutral, $52.07, $49 PT]), and KBR (down ~1% [Neutral, $14.43, $14 PT]), while the S&P 500 has been roughly flat. We look to a number of catalysts and an impossible-to-ignore valuation as reasons to buy the weakness. We also reiterate our Buy rating and our $42/share price target, which is based on a conservative 9x P/E multiple on our 2017 estimate."
Shares of Chicago Bridge & Iron closed at $29.61 yesterday.
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