07:27 AM EST, 01/12/2024 (MT Newswires) -- Aecon Group Inc. (ARE.TO) was upgraded to Outperform from Neutral at CIBC Capital Markets.
Analyst Jacob Bout raised his price target on shares of the construction and infrastructure company to $18 from $12.50.
Bout said the changes "reflect significant potential upside in forward results and backlog in the back end of 2024 and 2025, as well as the transition to a much less riskier business model."
"While legacy fixed-price project risk remains near term, cash flow should improve," the analyst said in a note to clients.
Bout raised his price target on seven other engineering and construction, and heavy equipment companies, including Finning International Inc. (FTT.TO) and SNC-Lavalin Group Inc. (ATRL.TO).
"We continue to be constructive on the E&C industry going into 2024 given the growing backlog levels, high exposure to resilient transportation, environment/water (and/or nuclear) end-markets, strong balance sheet positions, and ability to protect/grow margins," the analyst said in a note to clients.
Bout said ATRL is his top pick for 2024 "given its strong growth prospects (nuclear and US infrastructure) and valuation discount to peers (we expect this valuation gap to close as ATRL works down its lump sum turnkey backlog).