There Is Now Opportunity In Fluor; DA Davidson Upgrades To Buy

After the Fluor Corporation (NEW) FLR returned to its fundamentals, DA Davidson Research analyst Brent Thielman upgraded the stock to Buy with a $55 price target.

Thielman sees a chance for “non-oil-oriented project booking catalysts in mining, government, infrastructure, & chemical. Since breaching 52-week highs in mid-February, Fluor shares have slipped (-23 percent) on soft Q1 earnings/guidance, investor angst around prospective beneficial Trump agendas and shorter term/range-bound oil price volatility.”

Analyst Commentary

Thielman said that the company's new multi-market approach offers a range of bookings catalysts. “Revived/sustained metal commodity prices continue to reignite interest in brownfield mining projects where Fluor is among the best-positioned companies globally with multiple front-end engineering contract awards over the past year. Larger awards could manifest as soon as 2H17,” Thielman said.

Thielman also highlighted how other opportunities like infrastructure and select downstream opportunities could stabilize Fluor's backlog over the next two to three quarters.

He also highlighted that while a rebound from market weakness could lead to varied share performances through the rest of the year, Thielman expects investor flight toward participants who have “historical records of success and participation in key growth markets, clear financial liquidity to support internal/external growth objectives, and even greater entry 'price sensitivity'.” He believes Fluor matches this criterion.

Overall, Thielman predicts bookings should catalyze growth for Fluor and lead to a higher valuation.

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