Back-to-back Contracts for Jacobs - Analyst Blog
August 17 2012 - 6:15AM
Zacks
Consistent with its deal-winning
spree, Jacobs Engineering Group Inc. (JEC)
recently announced that it has secured two strategic contracts from
Methanex Corporation, the world’s largest methanol supplier to
major international markets, and Shell Global Solutions
International B.V. ("Shell"), respectively.
Per the Methanex contract, Jacobs
will provide engineering, procurement and construction services for
the corporation’s methanol production facility in Louisiana. The
plant is expected to be operational by the second half of 2014.
This U.S. Gulf Coast facility, expected to grow in the coming
years, is estimated to hold a construction value of $550
million.
On the other hand, the contract
from Shell entails to provide engineering and project management
services (EPMS) to the company’s European downstream assets. The
contract carries options of renewal for an additional five years
and can be extended to other Shell businesses beyond Europe to the
Middle East and Africa.
With this contract, Jacobs' expect
to strengthen its long-standing partnership with Shell; thereby
providing services such as feasibility studies, small plant
modifications as well as discrete services for Shell's major
refining and chemical sites in Pernis, The Netherlands, and
Rhineland, Germany.
The company’s continued
diversification and international exposure through various contract
wins are noteworthy. Besides, continued investments by the
company’s pharma clients in emerging PharmaBio markets of Brazil,
China and India leave room for Jacobs to diversify further, both
categorically and geographically.
The company provides stiff
competition to other industry players like Fluor
Corporation (FLR) and Foster Wheeler AG
(FWLT). We currently maintain a Neutral recommendation on Jacobs.
The stock also carries a Zacks #3 Rank, which implies a short-term
(1-3 months) Hold rating.
FLUOR CORP-NEW (FLR): Free Stock Analysis Report
FOSTER WHELR AG (FWLT): Free Stock Analysis Report
JACOBS ENGIN GR (JEC): Free Stock Analysis Report
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