Downgrade Drops Stock of Jacobs Engineering
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Shares of Jacobs Engineering Group Inc. fell nearly 13% after Merrill Lynch cut its rating on the stock to “accumulate” from “buy” on concerns that the worsening picture for the energy sector could affect the power plant builder.
Merrill Lynch analyst Fritz Von Carp said shares of the Pasadena-based company, which provides engineering and construction services to a number of industries, including the refining industry, had risen 42% this year.
“We don’t expect much more multiple expansion while other energy-related stocks are under so much pressure,” Von Carp said in a research note.
However, Jacobs’ refinery-building portion of its business is “relatively small,” said CS First Boston analyst John McGinty.
Last week, Jacobs reported an 18% rise in net income on revenue of $1.41 million for its fiscal third-quarter.
Jacobs shares reached a 52-week high of $75.50 on June 1. Shares fell $8.28 to close at $57.37 on the New York Stock Exchange.
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