Chicago Bridge & Iron (CBI) Stock Soars After Analyst Upgrade

NEW YORK (TheStreet) -- Shares of Chicago Bridge & Iron (CBI) closed up 6.58% to $58.63 on Monday after analysts at Goldman Sachs upgraded the multinational conglomerate to "neutral" from "sell" and increased their price target to $55 from $40.

"Global LNG award cycle is nearing conclusion, but CBI is delivering stronger market share," analysts noted. "US LNG project progress has continued over the past quarter, including Magnolia, Freeport, Corpus Christi, and Elba Island projects." 

Furthermore, Goldman Sachs increased its earnings estimates for 2016 and 2017 to $5.24 a share from $4.30 and to $4.66 a share from $3.73, respectively.

The analyst action also follows a report that Anadarko Petroleum (APC) is preparing to choose a construction team led by Chicago Bridge & Iron for a liquefied natural gas plant in East Africa.

About 4.9 million shares of Chicago Bridge & Iron traded today as the market closed, above the company's average trading volume of about 3.9 million shares.

TheStreet Ratings team rates CHICAGO BRIDGE & IRON CO as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CHICAGO BRIDGE & IRON CO (CBI) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, compelling growth in net income, attractive valuation levels and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow."

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

  • CBI's revenue growth has slightly outpaced the industry average of 3.1%. Since the same quarter one year prior, revenues slightly increased by 6.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • CHICAGO BRIDGE & IRON CO has improved earnings per share by 47.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CHICAGO BRIDGE & IRON CO increased its bottom line by earning $4.98 versus $4.18 in the prior year. This year, the market expects an improvement in earnings ($5.65 versus $4.98).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Construction & Engineering industry. The net income increased by 48.6% when compared to the same quarter one year prior, rising from $88.95 million to $132.23 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Construction & Engineering industry and the overall market, CHICAGO BRIDGE & IRON CO's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • You can view the full analysis from the report here: CBI Ratings Report

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