For engineering and construction investors, it’s all about projects, projects, projects. And there's no shortage of projects in 2018, according to one Wall Street analyst.

The Analyst

Baird analyst Andrew Wittmann initiated coverage of Aecom
ACM 2.36%
with an Outperform and raised the price target from $40 to $45. Wittmann also upgraded Fluor Corporation (NEW)
FLR 1.47%
from Neutral to Outperform and raised the price target from $48 to $61.

The Thesis

The outlook for engineering and construction stocks is better than it has been in several years, and most of the stocks in the sector actually trade at a valuation discount to the broader market, Wittmann said in a Wednesday note. (See the analyst's track record here.)

After several years of restructuring among top companies in the space, Wittmann said balance sheets and operations are in much better shape heading into the next upcycle.

“E&C industry fundamentals offer some of their better growth prospects in years with nearly all major end-market verticals participating."

Aecom is a top play in U.S. infrastructure spending, the analyst said. Aecom has logged several quarters of strong organic revenue growth, and its backlog is up 8 percent compared to a year ago, according to Baird. The company's nearly 10-percent free cash flow yield is paving the way to debt repayment and eventually a capital return plan, Wittmann said.

Fluor is resetting its business by getting its cash burn under control, and previous problem projects are now coming to a close. Wittmann said. Awards fell to a 15-year low in the first quarter of 2017, but Wittmann said he sees the stock as an attractive contrarian play on a recent uptick in awards coupled with rock-bottom Wall Street expectations. The company’s solid balance sheet limits potential downside, he said.

Price Action

Fluor shares were trading higher by 1.18 percent and Aecom stock traded higher by 2.47 percent at the time of publication on Wednesday afternoon.

https://www.benzinga.com/analyst-rating ... onstructio

Norges Bank Investment Management, the arm of Norway's central bank that manages the country's $1.1 trillion oil fund, said Tuesday that it has excluded a further nine companies from the fund on ethical grounds.

Among those excluded is U.K. weapons maker BAE Systems PLC because of its involvement in the production of nuclear weapons. Data from the end of 2016, the latest available, shows that the oil fund held a 1.47% stake in BAE Systems.

AECOM, Fluor Corp. and Huntington Ingalls Industries Inc. have also been excluded for the same reason, while Honeywell International Inc.'s exclusion is maintained based on this criterion, it said.

LOS ANGELES, CA – January 22, 2018 – Related Companies today announced the selection of Los Angeles-based AECOM (NYSE:ACM), a premier, fully integrated global infrastructure firm, as construction manager for The Grand, the Frank Gehry-designed, mixed-use development in downtown Los Angeles on Grand Avenue across from The Broad museum and Walt Disney Concert Hall. A visionary public-private partnership, guided by the Los Angeles Grand Avenue Authority, The Grand is designed to revitalize Downtown Los Angeles’ cultural and civic core with a mix of commercial, retail, cultural and residential units featuring grand public spaces and world class architecture. Construction on The Grand is poised to commence in Fall 2018. Related also released new renderings of the project detailing the dynamic residential, retail, entertainment and public spaces that make up The Grand.

gpv1 schreef: ↑31 januari 2018, 15:12 Helaas geen details over infrastructuur. En grote onzekerheid blijft over financiering plan. Kan enige druk zetten op de koers.