KBR Stock Price Target Increased at DA Davidson

NEW YORK (TheStreet) -- KBR (KBR) stock received a price target raise to $25 from $22 by analysts at DA Davidson who maintained their "buy" rating.

KBR operates as an engineering, construction, and services company worldwide.

Analysts cited that the price target increase was due to the company's announcement yesterday to sell its Building Group subsidiary to privately held Pernix Building Group for $22 million.

"The sale was anticipated and consistent with the restructuring plan announced in late 2014, which is expected to focus operations on the company's core capabilities in Oil & Gas, E&C, and Government Services," analysts said.

Shares are falling 0.3% to $20.21 in Thursday's early morning trading session.

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

"We rate KBR INC (KBR) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and poor profit margins."

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

  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Construction & Engineering industry and the overall market, KBR INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$108.00 million or 535.29% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • KBR has underperformed the S&P 500 Index, declining 21.80% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The gross profit margin for KBR INC is currently extremely low, coming in at 5.64%. Regardless of KBR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, KBR's net profit margin of 3.06% compares favorably to the industry average.
  • KBR, with its decline in revenue, slightly underperformed the industry average of 3.9%. Since the same quarter one year prior, revenues fell by 12.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • You can view the full analysis from the report here: KBR Ratings Report

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