SNC-Lavalin’s STARR II Gets Another Contract

SNC-Lavalin Group (SNC), one of the world’s largest engineering and construction groups, announced that its STARR II joint venture has once again been awarded a five-year Indefinite Delivery Indefinite Quantity (IDIQ) contract, worth up to $300 million. (See Analysts’ Top Stocks on TipRanks)

Flood Mitigation Support

STARR II will provide technical and engineering services for the National Flood Insurance Program (NFIP) of the Federal Emergency Management Agency (FEMA). The joint venture, which has been providing services since 2014, will provide support to FEMA’s Risk Mapping, Assessment, and Planning (Risk MAP) program.

Through the NFIP, building owners in participating communities can buy federally backed flood insurance, an alternative to disaster assistance, to meet the rising costs of repairs to their homes.

Communities agree to adopt and enforce floodplain management bylaws to protect against future flood loss. The Risk MAP program supports the NFIP by providing communities and building owners with critical flood risk maps and datasets that highlight areas of greatest risk, areas that may require action.

Management Commentary

SNC-Lavalin president and CEO Ian L. Edwards said, “Flooding continues to make costly impacts threatening life and property throughout communities around the world, including the devastating situation that we are witnessing in British Columbia.

“Deploying global capabilities locally, our experts continue to develop climate adaptation tools that help provide timely, useful information so that communities worldwide can prepare for and respond to flood risks.”

Analysts Recommendation

On November 2, Desjardins analyst Benoit Poirier reiterated a Buy rating on SNC and lowered his price target to C$43 (from C$44). This implies 31.3% upside potential.

Overall, consensus among Wall Street analysts is a Strong Buy based on nine Buys and one Hold. The average SNC-Lavalin price target of C$43.94 implies upside potential of 34.1% to current levels.