Jacobs Engineering Group Inc. (45.77 ) received an infrastructure contract from Storengy UK Ltd. As per the agreement, Jacobs' will provide engineering, procurement and construction management (EPCM) services for above the ground infrastructure in connection to the installation of Storengy's new gas storage facility in Stublach, in the North West England.
Jacobs will design and install new gas compression, gas treatment facilities, a control system and utilities for the project.
Despite unfavorable market conditions, we believe that in the near term the company will perform well on the back of continuous winning of various contracts and strict control cost policy.
Jacobs will also benefit through its immense diversification. It is one of the world's largest and most diverse providers of technical, professional and construction services. Jacobs' diversification in terms of markets, geography and services will continue to facilitate future growth.
However, the very cyclical nature of its business, as well as its heavy dependence on third parties, is discouraging. Jacobs relies on third-party equipment manufacturers or suppliers to provide much of the equipment and materials used for projects.
The company also operates in a highly competitive environment. Some of its immediate competitors include Fluor Corp. Foster Wheeler AG, KBR Inc. , Technip, Lockheed Martin Corp. Computer Sciences Corp. and many more. We maintain our Underperform rating on the stock.
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