FLR: Recent Power Deal Will Shape U.S. Energy Project Pipeline Ahead

Narrative Update: Fluor Analyst Price Target Revised Upward

Analysts have raised Fluor's fair value price target from $49.89 to $51.00, citing improved revenue growth forecasts and recent developments involving NuScale Power's major U.S. SMR commitment as supportive factors.

Analyst Commentary

Analysts have evaluated recent developments related to NuScale Power and their impact on Fluor, providing both optimistic and cautious perspectives regarding the company's future outlook.

• The collaboration to deploy up to 6 GW of new nuclear capacity in the U.S. is viewed as a transformational milestone. This supports long-term revenue and earnings growth for Fluor.
• Bullish analysts highlight that this represents the largest SMR commitment by a utility in U.S. history. This could significantly expand Fluor's exposure to next-generation energy infrastructure.
• The potential for Fluor to begin monetizing its NuScale stake as early as next week is regarded as a catalyst for unlocking additional value and improving the company's capital efficiency.

• Some analysts emphasize that while the agreement is historic, further binding commercial steps are crucial before a more constructive view on growth or valuation is warranted.
• There is ongoing caution around the execution timeline. The industry faces regulatory and operational complexities that could delay meaningful revenue realization.
• Bearish analysts point out that NuScale shares remain rated Neutral, reflecting persistent uncertainty over the pace at which Fluor can translate these commitments into financial performance.

What's in the News

• Activist investor Starboard Value has acquired nearly 5% of Fluor and is seeking to boost the company’s share price. (Wall Street Journal)
• Starboard Value announced plans to unlock value from Fluor’s 40% stake in NuScale Power, suggesting separation of the asset and noting potential benefits from infrastructure policy and competitor exits.
• Fluor was awarded a contract by LanzaJet for front-end engineering and design of Project Speedbird, a sustainable aviation fuel production hub in North Yorkshire, England. The facility will produce over 90,000 tonnes of SAF and renewable diesel annually.
• Fluor was engaged by Swift Fuels as lead engineering contractor for the LG2F™ demonstration plant in Louisiana, advancing design plans with its Houston office and global resources.
• Fluor was awarded a position on the Cooperative Threat Reduction Integrating Contract IV by the U.S. Defense Threat Reduction Agency, making the company eligible to compete for task orders totaling up to $3.5 billion over 10 years.

Valuation Changes

• Consensus analyst price target has risen slightly from $49.89 to $51.00.
• Discount rate has increased from 8.49% to 8.80%.
• Revenue growth forecast has increased from 6.22% to 7.94%.
• Net profit margin projection has risen from 2.62% to 2.72%.
• Future P/E ratio estimate has decreased from 16.81x to 16.37x.