Sterne Agee Sees Improving Core Business Fundamentals For Babcock & Wilcox Company (BWC)

Sterne Agee has published a research report on Babcock & Wilcox Company BWC after seeing improved core business fundamentals during meetings with management.

In the report, Sterne Agee writes "We had the chance to host meetings with BWC management. While a large focus of the meetings was related to the potential impact on the global nuclear power market stemming from the recent events in Japan, the meetings also highlighted the strengths of BWC's other core Power & Government businesses. BWC currently generates a modest 5%-7% of operating profit from commercial nuclear (mostly Canada; not likely at risk) and has robust EPS growth prospects in our view as the Government business remains strong and Power should accelerate beginning in late 2011 as EPA rules are likely to drive demand for environmental aftermarket equipment/services on existing coal-fired power gen in the U.S. Although it is certainly possible to see increased opposition to new-build nuclear, we do not currently anticipate any major delays in the early stage progression of mPower or American Centrifuge Project (ACP)."

Sterne Agee maintains its Buy rating and $40 price target.

Babcock & Wilcox Company closed yesterday at $30.82.