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On Friday, KeyBanc Capital Markets adjusted its outlook on Fluor Corporation (NYSE:FLR), a global engineering and construction firm, by reducing its price target to $41 from the previous $54, while continuing to endorse the stock with an Overweight rating. Currently trading at $33.97, InvestingPro analysis suggests the stock is significantly undervalued, with a P/E ratio of just 2.73. The reassessment follows Fluor’s recent Strategy Day, which showcased the direction under new leadership.
The event was marked by the introduction of the incoming CEO and the recently promoted CFO, who presented new targets for EBITDA growth and capital allocation projected for the period from 2025 to 2028. With current revenue of $16.32 billion and a "GREAT" financial health score according to InvestingPro, the company appears well-positioned for its strategic initiatives. KeyBanc analyst Sangita Jain described the Strategy Day as a pivotal moment for Fluor, offering the new management an opportunity to establish their approach to executing the company’s strategic plan.
Jain’s commentary highlighted the visit to Eli Lilly (NYSE:LLY)’s GLP-1 facility, currently under construction in Lebanon, Indiana, which was part of the Strategy Day’s agenda. The new financial targets were seen as a necessary recalibration for Fluor, providing a fresh baseline from which the company’s performance can be gauged moving forward.
Despite the lowered price target, KeyBanc’s Overweight rating indicates a continued positive outlook on Fluor’s stock, suggesting confidence in the company’s potential to outperform the broader market or its sector. However, Jain noted that the monetization of SMR (small modular reactor) technology is no longer considered an immediate event that would contribute to the company’s near-term valuation.
Fluor Corporation, with its new leadership at the helm, is now set on a course to achieve its revised financial goals, as it navigates the complex landscape of the engineering and construction industry. The lowered price target by KeyBanc reflects a cautious but optimistic stance on Fluor’s ability to deliver on its new commitments in the coming years.
In other recent news, Fluor Corporation reported $16.3 billion in revenue for 2024, showcasing its robust financial performance. The company has also announced the successful startup of the Tengizchevroil Future Growth Project at the Tengiz oil field in Kazakhstan, which is expected to significantly boost crude oil production. Additionally, UBS has maintained a Buy rating for Fluor, with a price target of $57, highlighting the company’s life sciences expansion as a positive development. Meanwhile, DA Davidson has adjusted its price target for Fluor to $50 but continues to hold a Buy rating, emphasizing the company’s risk-averse strategy and capital return plans under new leadership.
In terms of executive changes, Tracey Cook has been appointed as the new Chief Human Resources Officer, succeeding Stacy Dillow, who is leaving the company. This transition is part of Fluor’s strategic succession planning to ensure stability and growth. The company has not provided further details on Dillow’s departure, which was disclosed in an SEC filing. These developments reflect Fluor’s ongoing efforts to strengthen its business portfolio and maintain its position in the engineering and construction industry.
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