Flour Wins Contract from Baxter - Analyst Blog

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Fluor Corporation ( FLR ) recently received a contract from Baxter International Inc. ( BAX ) to manage the early phase of the construction of a new biotechnology facility near Covington, Georgia; about 45 miles southeast of Atlanta. The value of the construction management contract has not been revealed; although it was included in the third quarter 2012 bookings of Fluor.

Currently, mass excavation and earth works are being carried on at the site of the project. The project aims to build up a facility which will provide therapies to treat a number of chronic and acute conditions, including immune deficiencies and critical care patients globally. Fluor is actively involved in this global welfare project with its Greenville, S.C. office providing construction management support.

As per the plans, production at the new biotechnology facility of Baxter will start in 2018. The site will be flexible enough to expand with the rise in the global market needs.

Fluor is one of the few engineering and construction companies with the technological expertise, logistics and procurement capabilities, and project management experience needed to execute on a large variety of projects. Given its strong financial position, Fluor has ample financial resource to pursue a niche acquisition program aimed at strengthening its considerable service breadth. The company is delivering solid results, driven by its diversified business model and targeted new awards strategy.

However, the company bears the risk of cost overruns in approximately 25% of the dollar value of its contracts. It may experience reduced profits, or in some cases, losses under these contracts if costs increase above its estimates. It depends on third parties to complete many of its contracts. Fluor is set to release its fourth quarter and full year 2012 earnings results on February 20, 2013.

Fluor serves a diverse set of industries worldwide, including oil and gas, chemical and petrochemicals, transportation, mining and metals, power, life sciences and manufacturing. It is also a primary service provider to the U.S. federal government.

Fluor currently has a Zacks Rank #3 (Hold) while some of its competitors such as Jacobs Engineering Group ( JEC ), Tyco International Ltd. ( TYC ), carry a Zacks Rank #2 (Buy).



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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BAX , FLR , JEC , TYC

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