Analysts At D.A. Davidson Review KBR's Purchase Of Honeywell Division

"With the acquisition of HTSI, the recent purchase of Wyle, KBR's legacy Government support services and Technology & Consulting work, non-traditional E&C work will now account for nearly 50 percent revenue," analyst John Rogers wrote in a note.

Rogers noted that the post the acquisition Large E&C projects (>$500 million) will represent only 15 percent of proforma revenue and the shift is expected to substantially reduce project and short-term financial volatility.

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HTSI is currently generating about $600 million of annual revenue and $42 million of adjusted EBITDA. The acquisition, which brings $34 million of tax benefits, is expected to add $0.06 per share to EPS in 2017, after transaction costs, and $0.15–$0.20 per share in 2018.

"Over the next several years, cost synergies offer modest further opportunities given the cost sharing nature of the work, but revenue growth synergies. Management is targeting $85 million by 2021," Rogers added.

Rogers reiterated his Buy rating and $20 target price on KBR shares, which is currently up 0.64 percent to $15.74.