Analyst Sees Rise In New Construction Projects

HARTFORD, Conn. (AP) — Customers of engineering and construction companies should soon begin awarding contracts as credit eases and the cost of oil and raw materials stabilizes, an analyst said Thursday as he upgraded the stocks of two companies.

Sterne Agee analyst Chase Jacobson said in a client note that long-term demand driven by global inflation and higher commodity prices "will lead to a return of a more normal demand environment" later in the second half of the year for engineering and construction companies.

He upgraded Fluor Corp. to "Buy" from "Neutral" and raised his price target to $67 from $55.

Jacobson raised his 2010 earnings estimate to $3.55 per share from $3.25 per share.

Analysts surveyed by Thomson Reuters expect Fluor to earn $3.54 per share for 2010.

Jacobson also upgraded Foster Wheeler AG to "Buy" from "Neutral" and raised his price target to $36 from $28.

Many customers of engineering and construction firms deferred project awards in the second half of 2008 due to rising commodity prices, tighter credit and a global decline in demand, he said.