National Bank upgrade AtkinsRalis (ATRL-T, “outperform”) to $53 from $46. Average: $47.27.
Analyst: “The timing of AtkinsRalis’ (formerly SNC) name change coincides well with its turnaround profile that remains attractive despite shares up 88 per cent year-to-date vs. flat for the TSX; that being said, “easy” money is likely behind us as FCF/Engineering execution is the primary focus for investors. Despite the YTD gains, shares have only recently crested the same absolute levels from the past 10 years, while the likes of WSP / STN have gone up by a factor of 6.7 times and 6.1 times, respectively, over the same timeframe (TSX up 56 per cent). FCF generation still will be our anchor for performance (on an annual basis, this year of course should be better than 2022A but at this point it’s hard to say whether positive OCF is realistic even though H2/23 is expected to be positive). Based on our numbers, the biggest positive lever for SNC’s valuation is engineering margins improvement and corresponding multiple expansion. The business outlook in Engineering/Nuclear remains robust, something that we hear from the majority of our engineering consulting cohort.”
Sytchev also upgraded STN and WSP