KBR (KBR) presents an "interesting" and "value-based investment opportunity" as its shares are down about 30% year to date and the company is getting ready to spin off its government services division in mid or late next year, Oppenheimer said in a note Tuesday.
KBR has an "attractive" setup as it is attempting to backfill its major Plaquemines LNG project, return capital to investors, and complete the spinoff of the Mission Technology Solutions division, the note said.
Meanwhile, the company's other segment, Sustainable Technology Solutions - which represents 30% of sales and 45% of earnings before interest, taxes, depreciation, and amortization - is a "solid low-to-mid teens revenue grower" and its 2025 EBITDA margins are expected at 23%, according to the note.
The division is also working on several opportunities to "return to long-term growth of 11-15%," the note said.
The investment firm also noted that in the last 10 years, KBR's management "made 13 acquisitions and sold four businesses, exited commodity businesses, and focused on lower-risk, higher cash flow work."
Oppenheimer started coverage of KBR with an outperform rating and $60 price target.
Price: 42.70, Change: +0.93, Percent Change: +2.23
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