Market Overview

KeyBanc Sees Babcock & Wilcox Management Initiatives Eventually Translating Into Revenue Growth

Share:
KeyBanc Sees Babcock & Wilcox Management Initiatives Eventually Translating Into Revenue Growth
Related
15 Biggest Mid-Day Losers For Thursday
7 Biggest Price Target Changes For Thursday

KeyBanc's Tahira Afzal reiterated Babcock & Wilcox Enterprises Inc (NYSE: BW)'s Outperform rating while maintaining the company's $22.00 price target. The reiteration came after Afzal met with CFO Jenny Apker and Babcock & Wilcox's investor relations team.

Afzal saw management's "migration to renewables/energy efficiency businesses as eventually translating into revenue growth and a multiple rerate." The green energy initiative will eventually offset the damage done by poor coal industry trends, according to the analyst. Afzal believes positive results would show as early as 2H16 while creating an organic revenue inflection point in 2H17.

Related Link: CFO Apker Buys 12,000 Shares Of Babcock & Wilcox Enterprises At $16.58/Share

'Underappreciated' Transition

At time of writing, Babcock & Wilcox's coal business was estimated to be about one-third of its 2016 revenues while shrinking to less than one-quarter in 2018, according to Afzal. "We think the inclusion of waste to energy to meet state renewables mandates is currently underappreciated and could lead to an eventually greater rerate vs. our current estimate," stated the analyst.

To provide "cushion" for management's renewable energy initiative, the analyst lowered FY17 EPS estimates from $1.64 to $1.53.

At time of writing, Babcock & Wilcox enterprises traded at $7.01, up 1.80 percent Tuesday.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for BW

DateFirmActionFromTo
Oct 2016Credit SuisseDowngradesNeutralUnderperform
Oct 2016Credit SuisseDowngradesNeutralUnderperform
Feb 2016Credit SuisseMaintainsNeutral

View More Analyst Ratings for BW
View the Latest Analyst Ratings

Posted-In: Analyst Color Long Ideas Price Target Commodities Reiteration Markets Analyst Ratings Trading Ideas Best of Benzinga

 

Related Articles (BW)

View Comments and Join the Discussion!