Goldman Sachs Upgrades Chicago Bridge & Iron On 'Strong' LNG Share

In a report published Monday, Goldman Sachs analysts upgraded the rating on

from Sell to Neutral, while raising the price target from $40 to $55. "Our Sell rating on CBI had been predicated on declining global LNG and upstream commodity capex. While the outlook for upstream and refining capex has deteriorated significantly, CBI has delivered sharply higher market share on incremental LNG awards, which had been a key risk to our call," the analysts said. The company's shares have declined by 4 percent since November 23, 2014, versus a 3 percent rise in S&P. The stock is down 30 percent over the past 12 months, versus a 13 percent gain in S&P 500. In the report Goldman Sachs noted, "Global LNG award cycle nearing conclusion, but CBI is delivering stronger market share. US LNG project progress has continued over the past quarter, including Magnolia, Freeport (additional trains), Corpus Christi, and Elba Island projects. We still expect E&C orders for LNG to decline off peak 2012-14 levels in Australia and the US; we are negative on Canada LNG projects in particular (Pacific Northwest and Kitimat), but acknowledge demand and CBI market share has been ahead of our estimates." The EPS estimates for 2016 and 2017 have been raised from $4.30 to $5.24 and from $3.73 to $4.66, respectively, to reflect higher LNG project revenue, steel plate structures segment revenue (sales into LNG), and margins.