Reconsider Chicago Bridge & Iron, Investors

J.P. Morgan's Jeffrey Y. Volshteyn maintained an Overweight rating on Chicago Bridge & Iron Company N.V. (NYSE: CBI), while lowering the price target from $57 to $52.

Volshteyn named the stock as J.P. Morgan's Top Pick in the E&C sector, while pointing out the attractive valuation as well as the robust upside potential.

"With 1) shares trading at 7x NTM EPS, 2) the nuclear overhang removed, and 3) strong momentum in new business across industries and geographies, we believe CBI offers strong risk reward potential for patient value investors," the analyst explained.

Volshteyn mentioned that Chicago Bridge & Iron was among the few fully integrated companies in the E&C sector that could independently execute on large and complex projects.

The company's Capital Services, Technology and Fabrication segments worked in collaboration with E&C business, helping to strengthen customer relationships and expand revenue streams across divisions.

"Over 80 percent of CBI's revenue is a result of cross-pollination across its various segments, a strong positive in the current capital-constrained environment," according to the J.P. Morgan report.

In addition, Chicago Bridge & Iron's revenue has become more U.S. focused, which Volshteyn sees as a positive in the current global macro environment. The revenue is expected to remain skewed toward the U.S. in future, despite the sale of the nuclear business.

The analyst also pointed out that 75 percent of the company's 2016 revenue was already in backlog, which is reassuring.