Better to travel than to arrive, the cliche goes, and investors at Amec seem to have taken the advice to heart.
Ahead of today's so-called Vision 2015 presentation, where the energy services company is setting out its strategy for the next five years, the shares climbed sharply.
Now the details are emerging, they have lost 29p to 795.5p, making them one of the biggest fallers in the FTSE 100.
The company said it wanted to more than double its earnings per share to 100p by 2015, partly by acquisitions. In particular it wants to make bolt-on acquisitions in Australasia, South America and the Middle East. Amec has around £700m of cash on the balance sheet and if it does not find enough suitable purchases, it could return some of it to shareholders although it said it had no plans in 2010 for extra payouts apart from the dividend. Despite the profit taking in the shares, Seymour Pierce kept its hold recommendation on the company. Analyst Caroline de La Soujeole said:
We summarize [Amec's key targets] here: goal to exceed 100p earnings per share by 2015 (2808: 43.4p); focus on growth with further margin improvement: revenue growth to 2015 is expected to be ahead of the 8% compound annual growth rate achieved by Amec since 2006; further margin improvement is expected to 2015 with the rate of increase being more gradual than that achieved between 2006-2009. Whilst these are long term forecasts, they concur with the general trend in our forecast.
Evolution Securities analyst Keith Morris, who flagged up the presentation earlier this week, seemed impressed by the company's targets:
Achieving 100p earnings per share in 2015 at a sector multiple implies a price of £12-£14 ashare – or almost 70% upside from the current price. A progressive dividend with the potential for additional distributions is useful too. Our 900p price target looks very achievable.
