Amec is in demand ahead of its snappily named Vision 2015 presentation on Friday.
What this really seems to mean is that the energy consultancy and engineering group, up 15p to 826.5p, is going to outline its business strategy for the next five years. Evolution Securities has just raised its rating on the company from add to buy, with analyst Keith Morris saying:
The macro picture is in Amec's favour. Short term the lack of Middle East exposure may be a plus and the signs that activity in Canadian Oil Sands is reviving is good news too. Amec offers good value on an ex-cash 2010 PE of 10 times and a clear strategy to deliver low risk, double-digit growth. We upgrade to buy with a 900p price target (was 850p) based on a mid-cycle sector average PE multiple of 14 times 2011 earnings.
As for the strategy briefing itself, Morris is looking for the company to unveil plans to grow both organically and by acquisition, saying it has up to £700m on its balance sheet. He said:
What to expect: (1) Focus on growth in Natural Resources rather than margin - as they are already near peak); (2) Focus on growth and margin expansion in Power and Process - will be benefit of run off of old poor margin contacts and potential for large increase in Nuclear; (3) Earth & Environmental - cross selling from other divisions plus small regional acquisitions; (4) Using the balance sheet (£700m or 200p/share) - bigger acquisitions in Natural Resources or Power and Process; (5) Better cash generation.
