This report is an updated version of the report published on 29 February 2024 at 4:05 PM AEDT.
Worley Ltd (ASX: WOR)
Worley Ltd (ASX: WOR) is an Australian engineering professional services company which provides project delivery and consulting services to the resources and energy sectors, and complex process industries.
Recommendation Rationale – SELL at AUD 16.945
- Profit Booking: WOR’ share price has breached resistance 2 level recommended in the previous coverage on 6 February 2024; thus, it is offering a profit booking opportunity.
- Technical Indicator: The momentum oscillator 14-Day RSI (~70.02) is in the overbought zone; and thus, prices can face correction in the short term.
- Overvalue Multiples: On a forward 12- month basis, key trading multiples (EV/Sales, EV/EBITDA, Price/Earnings, and Price/Cash Flow) are higher than the median of the Industrials’ sector.
- Financial Results: During H1 FY24, aggregated revenue and underlying NPATA increased by 22% and 30%, respectively.
- Key Risks: Worley is currently managing three risks at macro levels – ongoing geopolitical tension, retention of highly skilled resources, supply chain disruptions and inflation.
WOR Daily Chart
Daily Technical Chart; Source: REFINITIV
Valuation Methodology: Price/Earnings Approach (FY24E) (Illustrative)
The stock has crossed the resistance 2 level, hence representing a profit booking opportunity. Given its current trading levels, recent rally in the share price, and risks associated, it is prudent to book profit at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 16.945, at 03:40 PM AEDT, as of 29 February 2024.
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Note 1: Past performance is neither an indicator nor a guarantee of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 29 February 2024. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.
Technical Indicators Defined: -
Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.
Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.