Leading broker labels Worleyparsons shares a buy

Worleyparsons Limited (ASX: WOR): Buy, hold, sell?

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Many investors like to follow the views of leading sell-side research desks oR professional stock brokers in deciding what shares they should buy or sell. One of the world's most famous capital markets players in Goldman Sachs recently tipped Worleyparsons Limited (ASX: WOR) shares as a buy with a $17 "share price target".

The analysts are particularly bullish after the engineering group completed the giant $4.5 acquisition of Jacob's Engineering Group's chemicals and resources division. Worley's management believes they can find cost savings of between $130 million to $160 million within two years as a result of the merger. 

Goldman's also sees benefits from the deal: "Jacobs provides solid earnings' diversification to WOR, shifting the company from ~62% upstream O&G (oil and gas) exposure in FY18 to 44% in FY20E, a positive for WOR's through-cycle valuation in our view."

Today Worley shares change hands for $15.24 meaning they have some upside over the next 12 months if Goldman's analysis is on the money.

Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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