JEC Issues Disappointing Guidance for 2010 on the Back of Weak Capital Spending Outlook

Wunderlich Securities downgraded Jacobs Engineering Group Inc (NYSE: JEC) from “buy” to “hold.” The target price for JEC has been reduced from $52 to $38.

JEC posted its FQ4 EPS at $0.63, missing both the estimates and the consensus. JEC’s revenues and operating margins also fell short of expectations primarily as a result of higher-than-expected G&A. JEC’s backlogs also fell by 3.8% on the sequential basis. Jacobs has issued its EPS guidance for 2010 at $2.00-$2.60, substantially short of expectations.

According to Wunderlich Securities, the projections reflected JEC’s grave outlook for the near term as the company expects capital spending in the private sector and infrastructure markets to be delayed and that in the pharma and downstream markets to remain flat.

Wunderlich Securities has reduced its EPS for 2010 from $3.10 to $2.40.