Chicago Bridge & Iron Co. (CBI) finally bit the bullet and took an approximately $317 million hit for its South Hook and Isle of Grain projects in the United Kingdom. Consequently, its results going forward will no longer be much-burdened by that money-losing effort.
Further, the company indicated that roughly 70% of incoming orders are now of the cost-type variety, which significantly lessens the prospect of a repeat performance. The global economic growth -- coupled with the attendant demand for oil, gas, petrochemicals and refined products -- that stimulated investment in new and expanded plants over the last 12 to 24-month period is expected to continue to be a boon to CBI, which will be further aided by its Lummus acquisition. Consequently, we have changed our opinion to Buy. Our six-month target price for CBI is 38.3% higher than its current price.
During the three months ended June 30, 2008, CBI reported new awards of approximately $1.6 billion and revenue in excess of $1.4 billion, representing a 41% increase over the prior year. New awards for the six months ended June 30, 2008 were $2.5 billion compared with $4.1 billion in the same period last year. The comparable prior year period included the significant LNG awards within the CSA segment.
The company's backlog increased $626.3 million or 9% to $7.4 billion at June 30, 2008 compared with the year-earlier period. On June 30, 2008, cash and cash equivalents totaled $281.1 million. Our six-month target price is 38% higher than CBI s current price.
Read the full analyst report on CBI
Get real-time market insights and profitable stock recommendations from the team of analysts at Zacks Equity Research. See all todays Analyst Blog entries on Zacks.com.