Market Weakness And Execution Failings Plague Fluor Corp In Q3

William Blair downgraded shares of Fluor Corporation FLR from an Outperform to a Market Perform rating citing market weakness apart from the execution issues. The firm also reduced its target price by $10 from $58 to $48 on the stock to reflect the revised EPS estimates for 2017.

he comments came on the heels of Fluor reporting worse-than-expected results for the third quarter. The guidance also failed to cheer investors thus dragging the stock down more than 10 percent. The negative announcements allowed analysts to downgrade the stock.

Analysts Chase Jacobson and Paul Dircks pointed out that end markets weakness has been a consistent factor since late 2014. However, they said Fluor did well to maintain its position with efforts to enhance winning rate by its vertical integration and diversified tactics. The key factor is that it focused on boosting its exposure to smaller projects and maintenance.

In a research note, the brokerage viewed, “We remain optimistic about the company’s market position and growth strategies, but given the magnitude of cost overruns in North America on top of what is likely to be a persistently weak end-market environment into 2017 and lower-than-expected earnings, we are downgrading shares.”

The firm reduced its EPS estimates from $3.25 to $2.25 for the current year and for 2017 from $3.60 to $3.00 following the weak third quarter results.

William Blair expects more color on Fluor’s long-term tactics and outlook when the company meets analysts next week.

At last check, the stock fell 13.65 percent on the day to $44.72.