Analyst Upgrades Engineering, Construction Group

HARTFORD, Conn. (AP) — Rising oil prices and brighter prospects for construction work in China later this year and next will boost the engineering and construction sector, an analyst said Wednesday.

Goldman Sachs analyst Joe Ritchie upgraded the engineering and construction sector to "Neutral" from "Cautious" and also increased his ratings on Jacobs Engineering Group Inc. and Fluor Corp.

"We believe the group could rally over the next six months as the group tends to trade in sympathy with oil and we believe investors could rotate into energy and construction given that it has lagged other energy levered sectors year-to-date," he said in a note to investors.

He upgraded Jacobs Engineering Group to "Buy" from "Sell" and increased his rating of Fluor to "Neutral" from "Sell."

However, Ritchie stopped short of upgrading the sector to "Attractive" because he believes some project delays will persist in the short run.

He downgraded Emcor Group Inc. to "Sell" from "Neutral," citing the continuing effects of the recession on nonresidential construction.

Shares of Fluor fell $2.22, or 4.9 percent, to $43.44 in afternoon trading. Jacobs Engineering Group rose 70 cents to $39.02 and Emcor Group fell $1.78, or 8 percent, to $20.48.