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Broker snap: AMEC needs to deliver on margins pledge
Thu, 09 Feb, 2012
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Broker snap: AMEC needs to deliver on margins pledge
Fri, 27 Aug 2010, 08:40:00
Margins were lagging at
AMEC
in the first half of 2010 but the engineering and project management group beat expectations on revenue growth, Nomura Securities said. "The weakness [in margins] came primarily in Natural Resources and Power, with a non-contributing acquisition and the company facing further pricing pressure from clients," the Japanese broking house said. Full year margin guidance has been lifted, the broker noted, and the company has stated its confidence in delivering above its 8.5% target for fiscal 2010, "implying a fairly significant 120bp [120 basis points] sequential uplift into the second half." Nomura has stuck with its "buy" recommendation for the stock and its 1050p price target, but said the company's order backlog will need lifting by the year end and management will have to deliver on its promise to improve margins to justify the positive rating.
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