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STOCKS NEWS EUROPE-Sacyr shares soar after Panama bid news

Thu Jul 9, 2009 4:20am EDT

Stocks

   

Shares in Spanish construction group Sacyr (SVO.MC) surge as much as 19.8 percent after its consortium with Italy's Impregilo (IPGI.MI) has submitted the lowest bid for a $3.12 billion contract on the Panama Canal, indicating it is likely to win the work.

Emilio Rotondo, analyst at BNP Paribas Fortis says it is good news, but the shares have overreacted.

"Even if you assume that Sacyr had 100 percent of the contract it would mean 120 million euros (in terms of profit) for them. But that's not the case. I expect the shares to correct," he says, adding that he sees fair value at 8 euros per share for Sacyr.

Analysts at BPI says the news is positive, but notes that profitability is not disclosed. "The total award amount represents 18 percent of the construction orderbook assuming a 50 percent stake in the consortium," the broker says in a daily note to clients.

The definitive winner of the contract should be announced in a few weeks.

Sacyr shares are up 12.6 percent to 10.90 euros, versus a 1.2 percent rise in the DJ STOXX construction index .SXOP

For a full story on the bid process, please click on [ID:nN08387395]

Reuters Messaging rm://elizabeth.oleary.reuters.com@reuters.net


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