Order Inflows To See Growth At Foster Wheeler’s Lower Margin Power Group

Analysts at Pritchard Equity Research maintain their "buy" rating on Foster Wheeler AG FWLT, while reducing their estimates for the company. The target price for FWLT is set to $28. According to Pritchard Equity Research, “FWLT reported slightly disappointing Q2 2010 results led by a low revenue number due to low backlog turnover and lower margins in Global Power. FWLT gave a mixed outlook on its call, unfortunately the order inflows in the back half of 2010 will see growth in its lower margin Power Group. It appears that the financing of major projects is still putting a damper on projects of all sizes. The demand is definitely building, but expectations are now set for 2011 awards in order to see growth.” “Unfortunately, with 24% and 19% EBITDA margins in E&C in the first two quarters, we were looking for upward guidance to the 18% to 20% range. As for the 16% to 18% for Power, flat guidance was inline with expectations. Backlog is expected to build through year-end as Eastern Europe and Asia remain solid growth markets. However, the build is also in part due to slower ramp-up of projects, which leads us to decrease our 2010 estimates,” the analysts say. Pritchard Equity Research has lowered its EPS estimates for 2010 and 2011 from $2.01 to $1.82 and from $2.40 to $2.30, respectively. More Analyst Ratings here.