Will This Lowered Price Target Have A Negative Impact on KBR (KBR) Stock Today?

NEW YORK (TheStreet) -- Analysts at Jefferies Group (JEF) lowered their price target on KBR Inc. (KBR) to $33 from $34, and cut their current quarter estimates to 25 cents per share from 38 cents per share on Tuesday.

The firm said it made these changes based on the lingering impact of some troubled products.

Jefferies kept its "buy" rating on the stock.

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Separately, TheStreet Ratings team rates KBR INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate KBR INC (KBR) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, a generally disappointing performance in the stock itself and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • KBR's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.48, which illustrates the ability to avoid short-term cash problems.
  • KBR INC's earnings per share declined by 10.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, KBR INC increased its bottom line by earning $1.54 versus $0.96 in the prior year. This year, the market expects an improvement in earnings ($1.85 versus $1.54).
  • Looking at the price performance of KBR's shares over the past 12 months, there is not much good news to report: the stock is down 32.48%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Construction & Engineering industry. The net income has decreased by 10.0% when compared to the same quarter one year ago, dropping from $30.00 million to $27.00 million.
  • You can view the full analysis from the report here: KBR Ratings Report
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