Morgan Joseph Upgrades Jacobs Engineering Group (JEC) to Buy
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Morgan Joseph upgrades Jacobs Engineering Group (NYSE: JEC) from Hold to Buy with a $93 price target.
The firm said, "We believe the company is solidly positioned to benefit from strength in the oil and gas markets over the next several years, and view the recent share price retrenchment of JEC stock (down over 25% from its 52-week high in early January) as a buying opportunity to own one of the blue chip names in the E&C space. Furthermore, Y/Y backlog growth continues to accelerate, exceeding 50% in the company's F2Q08 report, which provides us with confidence in the company's ability to achieve our earnings expectations over the next several quarters."
The firm believes that Jacob's Energy & Refining Downstream and Oil & Gas Upstream segments, which accounts for 40% of revenue, will be robust for many years due to high oil prices, expansion of refining capacity, and a shift in crude supplies. In addition, the company's federal work, which accounts for 18% of revenue, should benefit from the US military's Base Realignment and Closure (BRAC) program, along with from clean-up work of weapons and nuclear facilities. Finally, Morgan Joseph likes JEC’s business model which focuses on growth through the development of long-term client partnerships vs. competing for one-time transactional projects.
Jacobs Engineering Group, Inc. provides technical, professional, and construction services to industrial, commercial, and governmental customers worldwide.
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