JEC Jacobs Engineering Group Inc

In an effort to expand its information technology capabilities, Jacobs Engineering Group Inc. (JEC) recently acquired Unique World, an IT services provider in Sydney, Australia.

The acquisition allows Jacobs to expand its IT services, while serving the existing customers such as mining and minerals clients, the Defense Department and other public sector agencies and commercial businesses.

The acquisition appears to be the company’s key expansion strategy in the new and existing locations; targeting growth possibilities of strong IT services market outside the U.S. The terms of the agreement has not yet been disclosed.

Looking into the acquired business, Unique World engaged a strong information and knowledge management team with a strong delivery focus. Besides, IT services of the company also concentrated on high value services viz, enterprise collaboration and intranets and portals solutions using Microsoft SharePoint Server.

Jacobs’ diversification across markets, geographies and services has been supporting its growth even in a competitive environment since years. With a significant market share, Jacobs presently constitutes a significant part of huge global infrastructure market. Over time, the company has been planning to expand into the emerging markets like Australia, China, Brazil, as well as Asian countries through joint ventures, contract wins, and acquisitions with a target of diversification into sectors like oil and gas, mining, IT services and power.

On this backdrop, we view the latest take-over as a stride toward the company’s strategic and ‘unique’ diversification, both geographically and sectorally. We believe, in the long run, the acquisition will ensure solidarity of knowledge exchange, expansion of global resource base and enhancement of capabilities of both the allies; thereby sustaining a mutual client-focused culture-conducive to growth.

Jacobs’ worldwide ever-increasing presence is thus a splendid indication of its strong growth trajectory in the infrastructure market across the globe. This has also been winning investor confidence over time and is expected to continue with such outlook further. The company directly competes with its peers, viz. Fluor Corporation (FLR) and Foster Wheeler AG (FWLT).

We currently hold a Neutral recommendation on the stock. Jacobs has a Zacks #2 Rank, implying a short-term (1-3 months) Buy rating.

 
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