Credit Suisse cuts target on Dubai’s Drake, Arabtec
Lowers Drake price target to 1.26 dirhams from 1.30 dirhams; Keeps "outperform" rating on Drake; Reduces Arabtec price target to 1.34 dirhams from 1.47 dirhams; Retains "neutral" rating on Arabtec
September 8, 2011 4:05 by Reuters
Credit Suisse cut its price target on Dubai’s Drake & Scull International PJSC (DSI) and Arabtec citing lower margin estimates and a slump in contract awards for the companies.
Property prices in Dubai have been under pressure since late 2009, when the financial crisis and a drop in oil prices ended a six-year economic boom in the Gulf region.
The brokerage cut its share-price target to 1.26 dirhams from 1.3 dirhams for contractor DSI and to 1.34 dirhams from 1.47 dirhams on Arabtec, the largest builder in the United Arab Emirates by market value.
Credit Suisse said it maintained its preference for DSI over Arabtec on the back of strong backlog growth for DSI, compared with stalled growth and declining profitability for Arabtec.
Arabtec’s second-quarter net profit fell 74 percent, missing analysts’ forecasts. (Reporting by Maneesha Tiwari in Bangalore; Editing by Maju Samuel)