Chicago Bridge & Iron Stands Ready To Make A Recovery

Argus’ Stephen Biggar believes that although Chicago Bridge & Iron Company N.V. CBI has been facing challenges due to the weakness in the energy sector over the past two years, the company’s key markets appear to be in the early stages of a recovery.

Biggar initiated coverage of the company with a Buy rating and price target of $43.

Signs Of Recovery

The analyst mentioned that the company was unlikely to see any sudden rebound in revenue or earnings due to the energy sector weakness, although given signs of recovery in Chicago Bridge & Iron’s key markets, a gradual improvement was expected in the company’s business.

The stock is currently trading at a discounted valuation, reflecting Chicago Bridge & Iron’s existing business challenges, along with uncertainties related to a legal dispute associated with the nuclear construction business, Westinghouse Electric, acquired in late 2015.

Stock Upside

However, Biggar believes that a gradual improvement in operating results was likely to drive the stock closer to its historical P/E valuation.

The analyst expects upside potential 30 percent from the current levels.