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US nuclear foothold a positive catalyst for agriculture-to-engineering firm

This looks a canny time to harvest the earnings recovery potential at agriculture products-to-engineering play Carr’s (CARR)

The $20m acquisition (7 Aug) of US engineering business NuVision brings a strong foothold in the main nuclear markets of the US and will boost Carr’s future earnings.

Pittsburgh-headquartered NuVision’s customers include the US Department of Energy, major nuclear energy suppliers, public utilities and international governments.

NuVision boasts a very healthy order book and the acquisition offers potential for revenue synergies with Carr’s other nuclear engineering businesses.

Sentiment towards Carr’s, whose agriculture division supplies farm machinery and feed blocks for cattle, is recovering following a period of weaker-than-expected demand in the US feed market and a delayed engineering contract. Encouragingly, this contract has now been signed and US cattle prices seem to be recovering.

Investec Securities’ Nicola Mallard has upgraded her price target from 170p to 195p to reflect NuVision and the profit recovery she forecasts for the year to August 2018. Results for the year to August 2017 are forecast to show lower normalised pre-tax profits of £11.3m (2016: £14.1m), although Mallard looks for a strong rebound to £15m next year ahead of £16.3m in fiscal 2019, with increased dividends of 4.3p and 4.5p shaded in for these latter years.smaller1

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