Analyst Upgrades KBR, Citing Rising Oil Prices

HARTFORD, Conn. (AP) — Shares of engineering and construction firms jumped Tuesday as an analyst upgraded KBR Inc. and reiterated his "Buy" ratings for three other companies, saying they are benefiting from rising oil prices.

Broadpoint AmTech analyst Will Gabrielski raised his profit estimate for KBR, upgraded the engineering and construction firm to "Buy" from "Neutral" and raised his price target to $21 from $13, implying a more than 25 percent premium from its closing price Friday.

He expects earnings will be $1.66 per share in 2010, up from $1.64 per share. He initiated an estimate of $1.91 per share for 2011.

Analysts surveyed by Thomson Reuters expect, on average, earnings in 2010 to be $1.55 per share and expect profit to be $1.80 per share in 2011.

"Given our positive view on the space and firming oil prices, we believe KBR will perform inline with our bullish outlook on other energy-focused engineering and construction companies as sentiment improves and backlog visibility increases," he said.

He said development of the Gorgon gas fields off Australia and two Saudi projects, the Yanbu refinery and Ras Tanura petrochemical plant, provide "opportunities for significant bookings" in the next six to 12 months.