Competitive Environment May Pressurize JEC’s Operating Margins in 2010
Credit Suisse maintains its “outperform” rating on Jacobs Engineering (NYSE: JEC), while reducing its estimates for the company. The target price for JEC has been reduced from $48 to $45.
JEC posted its FQ4 EPS short of the consensus expectations. With revenues falling by 20%, JEC posted the lowest quarterly revenues for 2009. JEC’s backlog declined by 9% y/y during the quarter, reflecting order cancellation of $320 million. JEC’s EPS projections for FY2010 were also disappointing at $2.00-$2.60. The outlook reflected JEC’s expectation of a decline of 28% y/y in the EPS.
Although Credit Suisse believes that guidance is conservative, it expects the competitive environment to pressurize JEC’s operating margins in 2010. Credit Suisse reduced its EPS estimates for FY2010, FY2011 and FY2012 to $3.00, $2.75 and $3.35, respectively.
