Activist investor Starboard Value has bought nearly a 5% stake in Fluor Corporation (FLR) and plans to push for ways to lift the company’s share price, according to people familiar with the matter. The move signals that Starboard sees more room for improvement at the engineering and construction firm.
Fluor, based in Irving, Texas, is worth almost $8 billion. Its stock is down about 3% so far this year. The company provides engineering and project services for large projects in industries such as oil and gas and life sciences. However, investors have recently focused on one of Fluor’s smaller but faster-moving assets: its nuclear reactors.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Following the news, FLR shares climbed about 2.6% on Monday and extended those gains in pre-market trading, rising roughly 8% at the time of writing.
NuScale Stake Draws Focus
Fluor owns almost 40% of NuScale Power (SMR), which designs small modular nuclear reactors. NuScale’s shares have surged over 145% this year as investors bet on growing power demand from data centers and other technologies tied to artificial intelligence. The rally has lifted NuScale’s market value to over $12 billion.
Starboard believes Fluor’s core business is being undervalued compared with the market’s view of its NuScale stake. The firm wants Fluor to explore options for that holding, including a possible sale. Fluor invested in NuScale more than ten years ago and has already sold a small part of its stake.
Starboard Chief Executive Jeff Smith is expected to explain the firm’s view at the 13D Monitor Active-Passive Investor Summit in New York.
Positioned for U.S. Growth
Starboard also sees a long-term opportunity in Fluor’s base business. The firm believes Fluor could gain from new government policies under President Trump that encourage investment in U.S. infrastructure and energy projects. Many of Fluor’s peers have exited parts of the construction market, leaving fewer players to take on major work.
Starboard has a history with similar investments. In 2019, it took a position in Aecom (ACM) and pressed for changes that led the company to exit its construction business. Aecom shares have since traded near record highs. Investors will now watch whether the firm’s involvement sparks moves that highlight the value of Fluor’s projects and its growing link to the energy transition.
Is FLR a Good Stock to Buy?
Fluor boasts a fairly positive outlook among the Street’s analysts, with a Moderate Buy consensus rating. The average FLR stock price target stands at $48.83, suggesting a 1.98% upside from the current price.
