KBR might unlock worth by separating STS and GS companies, Citi says By


© Reuters. KBR might unlock worth by separating STS and GS companies, Citi says

By Employees

In a be aware to purchasers Wednesday, following conferences with KBR’s (NYSE:) administration, Citi analysts highlighted they see potential optionality from the corporate separating its Sustainable Know-how Options (STS) and Authorities Options (GS) companies.

“… whereas the corporate highlighted potential synergies from protecting its two companies (GS and STS) collectively, we see potential optionality given KBR might finally separate these companies, which we expect might probably create incremental worth for KBR’s shareholders,” the analysts commented.

The analysts stated they see STS being probably ascribed a better valuation a number of over time as a stand-alone firm. This may be very true if demand momentum throughout STS’s finish markets continues to select up and KBR continues to ship/execute on its excessive development/margin targets, they famous.

Whereas the analysts are bullish on the prospects of a separation, they do not see one as imminent as they view STS nonetheless as a comparatively small enterprise with an estimated $1.25 billion in gross sales and $224M in adj. EBITDA in 2022.

“All that being stated, whereas we don’t suppose a separation is imminent, we do suppose a possible separation over time, might unlock further worth for KBR’s shareholder as each “pure-play” companies might commerce at increased multiples over time given their premium development traits,” the analysts added.

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