KBR cut to Neutral at BofA, citing program cancellations and lack of new catalysts

[Defence Systems International Exhibition]
Daniel Berehulak/Getty Images News

KBR (NYSE:KBR [https://seekingalpha.com/symbol/KBR]) +0.9% in Wednesday's trading despite a downgrade at Bank of America to Neutral from Buy with a $55 price target, reduced from $70, believing the U.S. Department of Defense's cancellation of the $20B HomeSafe contract - which had been expected to be a key medium-term growth driver - combined with other program cancellations and a lack of near-term new catalysts, will give the market pause.

Additionally, a change in global energy priorities, delayed liquefied natural gas decisions in the U.S., and the lack of insight on near-term catalysts continue to pressure valuation of KBR's (NYSE:KBR [https://seekingalpha.com/symbol/KBR]) stronger Sustainable Technology Solutions portfolio, according to BofA analysts led by Mariana Perez Mora.

KBR’s (KBR [https://seekingalpha.com/symbol/KBR]) Mission Technologies Solutions portfolio seems to be taking hits from all sides, and the company's NASA exposure remains another area of concern given cuts to the budget, and the BofA team expects KBR shares will be largely range-bound until the company can regain its "credibility" in Mission Technologies Solutions and meaningful STS awards kickoff.

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