The global economic growth - coupled with the attendant demand for power and automation - that stimulated investment in new and expanded plants over the last 12 to 24 months, is expected to continue to some degree during 2008. Further, ABB Ltd.'s (AVP) outlook should be aided by its continuing revitalization efforts. The company's impressive menu of offerings - as well as the substantial increase in its year-end 2007 backlog together with management s guidance for 2008 - have prompted us to upgrade our opinion to Buy, a move supported by our six-month target price of $29.92, which is15.5% above Chicago Bridge and Iron Company's (CBI) current market price.
Almost immediately after the departure of its Chief Executive - Fred Kindle, who left over 'irreconcilable differences' - ABB released summary results for 2007. Net profit in Q4-07 rose to $1.8 billion, which is more than four times the $422 million it earned in Q4-06. Revenues in Q4-07 were $8.7 billion versus $6.9 billion. Results were helped by the sale of the Lummus Global oil and gas production unit to CBI for $530 million, as well as a $475 million tax benefit; together, those two items totaled just over $1 billion.
The company reported net income of $3.8 billion for 2007 against $1.4 billion in 2006. Orders rose by over 10% for the year, as demand remained strong around the globe for ABB's products and services used to increase energy efficiency, deliver power more reliably and improve industrial productivity. The company indicated that it expects growth rates of around 15 to 20 per cent in 2008 for its power-related activities and about 10 per cent in its automation business. Also, the company announced that it would raise its dividend to $.044 per share and it will buy back $2 billion worth of its shares.
Read the full analyst report on ABB.
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