Ahead Of The Bell: KBR

HARTFORD, Conn. (AP) — Profit could decline significantly at KBR Inc. this year with the exit of U.S. troops from Iraq, an analyst said Monday as he downgraded the military contractor.

Analyst Barry Bannister of Stifel, Nicolaus downgraded the Houston company to "Hold" from "Buy."

"Based on the rapid withdrawal from Iraq, we believe KBR faces the loss of (about) 23 percent of current year profits attributable to U.S. Middle East military work within at most two years," he said in a note to investors.

President Barack Obama told Iraqi Prime Minister Nouri al-Maliki in a meeting in Washington last week that he plans to stick to the U.S. plan for a complete withdrawal from Iraq by the end of 2011.

In contrast, work in Afghanistan, which is the subject of strategy sessions by Obama and his military and foreign policy advisers, has been awarded to competitors for KBR, Bannister said.

Bannister had other concerns about KBR, saying he is "quite weary of the mixed signals received from KBR regarding the projected profitability of large petroleum projects in which KBR is involved."