Barclays on U.S. Engineering & Construction: FLR, FWLT, and MDR still Seem Positioned for Longer-term Growth
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Rating Summary:
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Today's Overall Ratings:
Up: 8 | Down: 6 | New: 26
Rating Summary:
13 Buy, 18 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 6 | New: 26
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Barclays on U.S. Engineering & Construction: FLR, FWLT, and MDR still Seem Positioned for Longer-term Growth
Barclays analyst, Andy Kaplowitz, said, "After meeting with Fluor (NYSE: FLR), McDermott (NYSE: MDR), and Foster Wheeler (Nasdaq: FWLT) at the Barclays Capital Energy/E&C conference, we remain cautiously optimistic that all three companies could grow backlog/earnings over the medium to longer term given solid prospect lists and positioning in emerging markets. While FLR and MDR continue to face some near-term uncertainty regarding problem projects, we think that ultimately both companies could enjoy improved execution over the course of 2012 as FLR's Greater Gabbard project ends and as four out of five of MDR's problem projects are completed, and all three companies could beat relatively muted margin expectations."
"The first half of 2012 still seems like it is shaping up to potentially be a strong
bookings period for "oily" E&Cs under our coverage. While we think it could still be relatively quiet in terms of new awards for all three companies in the very near term (FLR's mining prospects still seem robust in the near term though), we have been saying all year that several of our "oily" E&Cs seem to have many of their larger prospects moving toward a final investment decision around the end of 2011 or the first half of 2012."
"FWLT still seems like it should execute relatively well over the next several quarters, while we could still see some noise around MDR and FLR's problem projects. We do think investors expect some additional noise associated with MDR's subsea job for Petrobras (NYSE: PBR) while FLR's Greater Gabbard project continues slowly toward completion next spring, which should allow investors to focus on FLR's relatively healthy core business for most of 2012 and beyond."
"Overall, margin expectations in 2012 for all three companies seem relatively muted,�and we do think all three have the potential to beat these low expectations."
Barclays analyst, Andy Kaplowitz, said, "After meeting with Fluor (NYSE: FLR), McDermott (NYSE: MDR), and Foster Wheeler (Nasdaq: FWLT) at the Barclays Capital Energy/E&C conference, we remain cautiously optimistic that all three companies could grow backlog/earnings over the medium to longer term given solid prospect lists and positioning in emerging markets. While FLR and MDR continue to face some near-term uncertainty regarding problem projects, we think that ultimately both companies could enjoy improved execution over the course of 2012 as FLR's Greater Gabbard project ends and as four out of five of MDR's problem projects are completed, and all three companies could beat relatively muted margin expectations."
"The first half of 2012 still seems like it is shaping up to potentially be a strong
bookings period for "oily" E&Cs under our coverage. While we think it could still be relatively quiet in terms of new awards for all three companies in the very near term (FLR's mining prospects still seem robust in the near term though), we have been saying all year that several of our "oily" E&Cs seem to have many of their larger prospects moving toward a final investment decision around the end of 2011 or the first half of 2012."
"FWLT still seems like it should execute relatively well over the next several quarters, while we could still see some noise around MDR and FLR's problem projects. We do think investors expect some additional noise associated with MDR's subsea job for Petrobras (NYSE: PBR) while FLR's Greater Gabbard project continues slowly toward completion next spring, which should allow investors to focus on FLR's relatively healthy core business for most of 2012 and beyond."
"Overall, margin expectations in 2012 for all three companies seem relatively muted,�and we do think all three have the potential to beat these low expectations."
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