Raymond James
Globe says Bastien lowers Aecon Group "outperform"
2021-11-02 08:04 ET - In the News
The Globe and Mail reports in its Tuesday edition that Raymond James analyst Frederic Bastien has cut Aecon Group to "outperform" from "strong buy," with an unchanged $26 share target. The Globe's Darcy Keith writes that a contractual dispute has flared up on the Coastal GasLink pipeline project. Aecon released earnings last week that Mr. Bastien described as "a wee bit light on revenue." Aecon announced that SA Energy Group, its 50/50 joint venture with RB Somerville, has started an arbitration to resolve significant scope changes, delays, and COVID-19 impacts on the Coastal GasLink. Mr. Bastien says in a note: "As we understand it, the project owner instructed SAEG to carry out a material change order without agreeing on the price for that work, and without making any additional payments to cover the increased costs. At issue is RB Somerville's inability to continue funding its share of the cash flow requirements beyond 1Q22 should the situation not improve, at which point Aecon's obligation to fund further shortfalls would double. We do not know how this commercial dispute will shake out, but one would think Aecon holds the big end of the stick given today's tight labour market and rising gas prices."