December 19, 2019 / 3:18 PM / 2 months ago

BUZZ-SNC Lavalin's plea deal a positive surprise - CIBC

(Updates)

** CIBC calls SNC-Lavalin Group Inc’s plea deal settling the Libya corruption charges a “positive surprise”, given expectations of a long-drawn-out court battle

** Shares of the Canadian construction and engineering company rise for a second-straight day: up 5.3% at C$30.22

** A unit of SNC pleaded guilty to fraud and will pay a C$280 mln fine in a case where it was accused of bribing Libyan officials to get contracts between 2001 and 2011

** Brokerage revises rating to “outperformer” from “outperformer-speculative”; raises PT by C$7 to C$36

** Company says plea deal should remove the corruption overhang, which has been a major impediment to SNC’s multiple and valuation

** Core engineering services unit continues to have a solid outlook - CIBC

** Canaccord Genuity says the settlement is an unexpected gamechanger for SNC’s investment outlook; raises PT by C$8 to C$42

** However, both brokerages agree there remains some degree of heightened near-term balance sheet and fixed-price contract related risk

** Stock down 34.2% so far this year (Reporting by Shanti S Nair in Bengaluru)

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