RBC upgrades WS Atkins on medium-term outlook

RBC Capital Markets has upgraded WS Atkins from ‘sector perform’ to ‘outperform’ on its medium-term outlook, but reduced its target price from 1,550p to 1,400p.

In a note released on Tuesday, the investment bank said current trading is mixed for the FTSE 250 design, engineering and project management consultancy company.

“We have brought our 2017E forecasts down by 7% to reflect a tougher Middle East segment given the roll-off of some projects and the potential impact of the lower oil price along with some caution on the Oil & Gas segment.

“Conversely, trading in the UK is relatively stable and whilst the US market is currently flat, we expect a better H2 given contract wins and would expect some improvement post election.”

It noted that WS Atkins is well-positioned for the medium-term.

“We continue to believe that the company is well placed medium-term given its strong market positions and reputation in key markets where investment in infrastructure is likely to grow.”

RBC Capital Markets said while it isn’t a fan of the acquisition of the Projects, Products and Technology (PP&T) segment of international nuclear engineering business EnergySolutions, it appeared to make strategic sense.

“The deal creates a global platform and accelerates the group's position in a key growth market.”

At 1047 GMT, WS Atkins was unchanged at 1,262p per share.