by Investing.com-in a memorandum for customers this week, analysts emphasized one sector at Jefferies that, according to them, is well positioned to take advantage of the growth of infrastructure expenditure.
Specialty Engineering and Construction (E&C) companies are ready to take advantage of a wave of infrastructure investments, according to Jefferies -analysts, who confirm a bullish vision of the sector.
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“The E&C sector specialty seems uniquely positioned to catch the growth of infrastructure expenditure,” said the memorandum, referring to long-term drivers such as electrification, rastermodernization and gas Midstream Build-out-out.
Despite recent outperformance specialty E&C, at 12.1% years to date, rose versus 2.6% for the S&P 500 and 8.7% for industrialities-Jefferies is further upside down.
“With superior growth, robust final markets demand due to decade-end and catalysts, we see this premium as sustainable,” wrote analysts, and added that estimate revisions have been “remarkable” and that the momentum remains strong after the results of the first quarter.
Jefferies emphasized several steelwork: “Large project prices, disadvantaged momentum, margin expansion, acceleration and tightening of the competent work.”
They constantly expect trust in the second quarter, especially in renewable energy sources, where the Outlook 2025/2026 is encouraging.
According to the company, the basic principles of the sector remain strong, with consensus estimates that project an EBITDA CAGR of 16.2% from 2024-2026, well above 9.6% projected for both the S&P 500 and wider industry.
Jefferies adds that EPS is expected to grow with a clip of 35.8%, compared to 11.5% for the S&P 500.
While the sector is now trading a 2.3x premium to the S&P 500 on FY2 p/e, Jefferies states that this reflects a shift in the perception of investors: “Rising trends in a market for niche infrastructure create new premium-to-market dynamics.”
When it comes to the greatest risk, the company emphasized delays in renewable project development due to possible changes to the inflation reduction law.
Yet Jefferies sees larger E&C companies win shares as the sector consolidates.
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