broker target 52 dollars

Worley Parsons stock lost 35% of its value during the last quarter, but has risen 6% to $35.45 this morning on the back of news that the engineering services firm had procured Houston-based deepwater drilling company, INTEC Engineering, for $108.5m. We believe Worley Parsons is well-positioned to take advantage of the trend towards environmental engineering and is one of our key picks in the sector.

The strategic acquisition will fill the gap in Worley’s hydrocarbon business allowing Worley to service clients that operate in deepwater locations. Record oil and gas prices over the last quarter combined with the investment boom in the minerals industry has led to an increase in demand for Worley Parsons’ environmental engineering services. The world’s oil reserves are being located in areas which are increasingly difficult to locate and INTEC develops projects at depths of up to 2,400 metres. The acquisition will be debt-funded after Worley raised $144.5m through the US private placement market last week. Worley has a strong balance sheet and a history of making acquisitions on attractive multiples.

Worley has the skill base to supply most sustainable and emissions-related technologies including: -
Work to modify facilities
Work to reduce energy consumption
Work to reduce emissions.
Worley Parsons earnings growth is being driven by 3 factors: -
Strong industry conditions in oil and gas, power and alumina.
Upward pressure on engineering rates due to lack of supply
Increased staff numbers.
We maintain a Buy rating on Worley Parsons and a 12 month price target of $52.00.

Regards,
Bell Potter Securities Limited