Baird maintained a neutral rating on AECOM with a price target of $65, even as the engineering and construction firm’s shares fell 32% over the past six months to $69.72 at market close on August 28.
The firm’s outlook reflects ongoing headwinds from legacy construction management claims totaling approximately $1.1 billion in cash impact, including $600 million booked in the current fiscal year and an additional $500 million expected in the next fiscal year before legal resolutions. AECOM reported third-quarter fiscal 2026 revenue of $3.59 billion, exceeding Wall Street’s forecast of $2.05 billion, but adjusted earnings per share came in at negative $0.50, missing expectations of $1.51.
A pre-tax charge of $337 million related to a major construction management project further weighed on profitability. Despite these challenges, the company highlighted record backlog growth of 13%, a book-to-burn ratio of 1.6x, and a 6% increase in design activity across the Americas. Management noted project conditions differed from typical fixed-price arrangements due to controlled weather, internal labor utilization, and pre-established key deliveries, with five key metrics reported at or above plan over the prior seven weeks.
AECOM’s shares have underperformed the broader market, with Fluor trading at $53.28, down $0.82 or 1.52% on the same day. The company’s outlook remains tied to project execution, with a major construction management project slated for completion by March 2027.
Analysts also highlighted potential opportunities in Nepal, where AECOM and Fluor are positioned to participate in a $5 billion reconstruction effort following devastating floods, though no formal agreements have been announced.
