Babcock & Wilcox Enterprises Inc (BW) Shares Take a Hit on Structural Steel Issue in UK


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Babcock & Wilcox Enterprises Inc (NYSE:BW) shares are falling 17% to $3.00 in pre-market trading, after the power generation systems maker reported that it has identified a structural steel issue at a renewable energy project in the United Kingdom.

Management believes that the issue is the result of an engineering error by a subcontractor, and work has been stopped at the project pending further investigation. Additionally, while the issue has not manifested itself in other projects, the company has proactively stopped work at two renewable projects in the United Kingdom that have similar engineering designs.

“We are working diligently to assess the situation. Keeping in mind that the safety of our employees and subcontractors is our top priority, we chose to stop work temporarily at all three projects,” said Jimmy Morgan, senior vice president of B&W’s Renewable segment. “We presently expect the total cost impact to the first project will be in the range of $10 to 15 million. We also presently expect the total cost impact to the other two projects to be below that amount. These estimates do not take into account possible recoveries from third parties, which we intend to actively pursue.”

On the ratings front, BW stock has been the subject of a number of recent research reports. In a report issued on September 19, KeyBanc analyst Tahira Afzal reiterated a Hold rating on BW. On August 14, UBS’s Steven Fisher downgraded the stock to Hold and has a price target of $3.00.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Tahira Afzal and Steven Fisher have a yearly average return of 6.4% and a loss of 2.2% respectively. Afzal has a success rate of 64% and is ranked #829 out of 4660 analysts, while Fisher has a success rate of 48% and is ranked #3910.

Babcock & Wilcox Enterprises, Inc. provides advanced fossil and renewable power generation and environmental equipment that includes a broad suite of boiler products and environmental systems, and services for power and industrial uses. It operates through following segments: Global Power, Global Services and Industrial Environmental. The Global Power segment provides engineering, manufacturing, procuring, construction and commission boilers fueled by fossil fuels and renewable in addition to environmental systems and related auxiliary equipment primarily to steam generating customers globally. The Global Services segment provides aftermarket products and services to steam generating utilities worldwide and numerous industrial customers globally. The Industrial Environmental segment provides a range of environmental technology and services to numerous industrial end markets globally.