Saturday, August 23rd20.6°C
22568
21739

WSP Global shares set new high after bullish analyst forecasts of firm's growth

MONTREAL - Shares in engineering services firm WSP Global Inc. hit a record high Tuesday after industry analysts raised the company's target prices by as much as 15.7 per cent on a bullish outlook of its prospects for growth.

At least six analysts increased their price targets to between $36 and $42 after WSP closed a $293-million equity offering to fund the acquisition of Alberta engineering and geomatics firm Focus Group Holding.

The Quebec-based company's (TSX:WSP) shares peaked at $37.12 in mid-day trading before closing at $36.82, up $1.09 or 3.05 per cent, on the Toronto Stock Exchange.

Ben Vendittelli of Laurentian Bank Securities says the $366-million acquisition of Focus will result in significant sales opportunities as WSP leverages Focus' energy expertise with its other customers.

"We believe the acquisition of Focus provides the missing piece to WSP's global connectivity strategy allowing it to have a broad presence geographically and in all key verticals," he wrote in a report.

With its $284 million of annual revenues and high profit margins, observers say the addition of Focus and its 1,700 employees strengthens WSP's footprint in Canada and gives it a strong presence in Western Canada's growing energy sector.

The deal, which is expected to close about April 17, would also put WSP more than halfway towards its goal of adding $500 million of revenues from acquisitions by the end of 2015.

Paul Lechem of CIBC World Markets called the Focus acquisition "a significant step" towards WSP's target of generating $2.3 billion of annual net revenues and employing 20,000 people. He said the equity issue, including an $86-million private placement with the Caisse de depot and Canada Pension Plan Investment Board, was oversized to fund future acquisitions.

Vendittelli said he expects WSP will be able to capitalize on long-term opportunities and benefit from an eventual recovery in the U.K. and key markets in northern Europe.

Frederic Bastien of Raymond James raised his target price 27 per cent to $42 saying that the Focus deal makes WSP a better investment.

In addition to filling "a big hole" in its service offering, the analyst said Focus helps to "rebalance and strengthen the firm's footprint in Canada, which has been heavily weighted toward the east."

The deal will increase the number of employees by more than 10 per cent and bolster WSP's Canadian presence to 6,100.

Quebec would account for just 10 per cent of overall revenues. The rest of Canada would lead with 31 per cent, following by 24 per cent in Northern Europe, 14 per cent in UK, 12 per cent rest of the world, and nine per cent in the United States.

Sara O'Brien of RBC Capital Markets, who comes in at the low end of the price targets, says WSP's shares are trading at a premium compared to its peers, despite the organic cross-selling sales opportunities that will be derived from Focus.

Follow @RossMarowits on Twitter.

Note to readers: This is a corrected story. An earlier version referred to the company as WSP Group and gave wrong percentage for U.S. revenue

The Canadian Press


Read more Business News

22852


Recent Trending




Today's Market
S&P TSX15535.55-19.71
S&P CDNX1005.583.38
DJIA17001.22-38.27
Nasdaq4538.551+6.446
S&P 5001988.40-3.97
CDN Dollar0.9137-0.0003
Gold1279.90+6.2001
Oil96.30+1.82
Lumber352.80-2.80
Natural Gas3.88-0.009

 
Okanagan Companies
Pacific Safety0.18-0.005
Knighthawk0.01-0.005
QHR Technologies Inc1.20-0.01
Cantex0.065-0.005
Anavex Life Sciences0.265+0.005
Metalex Ventures0.08+0.005
Russel Metals36.78-0.81
Copper Mountain Mining2.99+0.11
Colorado Resources0.17-0.015
ReliaBrand Inc0.115+0.02
Sunrise Resources Ltd0.025-0.005
Mission Ready Services0.26+0.045

 



22710

FEATURED Property
2032434245 - 4035 Gellatly Road South
2 bedrooms 2 baths
$469,900
more details
image2image2image2
Click here to feature your property
Please wait... loading


How much mortgage should you carry?

There are several things to consider when deciding how much home to buy. 1. Draw up a budget including the new mortgage payments. While the rules used by most lenders require that the mortgage paym...


What is a journey without a destination?

Photo: ContributedI would call it a joy ride... You see a planned project or business has a destination. It may be an ongoing revenue stream, it may be a business value or an exit strategy. If you don...


Joint accounts: what you need to know!

Establishing a joint account may seem like a great strategy at first glance. However, there are many factors that must be considered before taking this action. This article will explore the use of &ls...

_



22885

22854


Member of BC Press Council


22707