Broadpoint.AmTech Upgrades KBR, Inc. (KBR) to Buy

May 26, 2009 11:40 AM EDT

Broadpoint.AmTech upgrades KBR, Inc. (NYSE: KBR) from Neutral to Buy. Price target increased from $13 to $21.

Broadpoint analyst says, "Given our positive view on the space and firming oil prices, we believe KBR will perform in-line with our bullish outlook on other energy focused E&C companies (Fluor (NYSE: FLR), Foster-Wheeler (Nasdaq: FWLT), & McDermott (NYSE: MDR)) as sentiment improves and backlog visibility increases. On the project front, we specifically point to Gorgon, Yanbu, and Ras Tanura as opportunities for significant bookings over the next 6-12 months. The G&I business has been an area of concern for us; we believe this is discounted into estimates at this point; we are slightly above consensus for 2009 and 2010 with our estimates. While G&I legal risk remains an overhang, and we believe Fluor and DynCorp will continue to play “catch-up” with respect to LogCAP IV bookings, we believe KBR management has done a solid job of making this point clear to investors over the past month, and that equity value risk from reduced LogCAP awards near-term is therefore limited. In addition, we have more confidence in KBR’s ability to grow the business away from LogCAP over the next few years internationally following an extensive discussion with management...Our $21 target price reflects a 12X multiple on our revised 2010 EPS estimate of $1.66 (consensus is $1.55) and a 10.5X estimate on our introduced 2011 EPS estimate of $1.91 (consensus of $1.80)."

KBR, Inc. (KBR) is an engineering, construction and services company supporting the energy, petrochemicals, government services, industrial and civil infrastructure sectors.

To see more analyst ratings on KBR Click Here.

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