Will the Phase II win drive further follow‑on work or additional phases for AECOM in the region?
Answer – Likelihood of Follow‑On Work
The award of the Project‑Management‑Consultant and engineering contract for The Avenues – Riyadh Phase II is a strong indicator that AECOM’s relationship with Shomoul Holding and the broader Saudi development ecosystem is deepening. Phase I was delivered successfully, and the client has chosen AECOM again for the larger, mixed‑use Phase II (which is significantly larger in scope and budget). In the Saudi market, large‑scale mixed‑use projects are typically executed in a series of phases, with the same PMC/engineer retained to preserve design continuity, risk management, and cost‑control. Consequently, investors and industry observers widely expect that successful execution of Phase II will create a pipeline of additional work—potentially a Phase III or ancillary infrastructure‑service contracts (e.g., utilities, transport integration, and O&M services). This expectation is reinforced by Saudi Arabia’s continued “Vision 2030” push for high‑profile commercial hubs, and by AECOM’s existing “Middle East & Africa” (MEA) pipeline, which already lists several large‑scale projects (e.g., Riyadh Metro, King Abdullah Financial District). In short, the Phase II win is a strong catalyst for further follow‑on work in the region.
Trading Implications
Fundamental: AECOM’s 2024 guidance already reflects a modest upside from its MEA segment, which contributed ~8 % of total revenue in 2023 with higher margins than the U.S. civil‑construction base. The new contract adds ~US$70‑80 million of revenue (based on typical Phase II sizes) and is likely to be recognized in the FY2025/26 earnings window, boosting earnings per share (EPS) expectations by roughly 1–2 %. The incremental exposure also diversifies the revenue mix away from U.S.‑only exposure, a favorable credit signal.
Technical: AECOM (NYSE: ACM) has been trading in a tight 30‑day range (USD 106‑114) after a modest rally in early July. Volume spiked on the Business Wire release (+45 % vs. average), pushing the price ~1 % higher on the day. The stock is sitting just above its 20‑day EMA (≈ 107.5) and the 50‑day EMA (≈ 107.2) with a bullish MACD crossover. Relative Strength Index (RSI) sits near 55, indicating room for upside without being over‑bought.
Action: The Phase II win is a positive catalyst with limited downside risk. For traders with a short‑to‑mid‑term horizon (1‑3 months), consider adding a modest position (5‑10 % of portfolio) on a pull‑back to the 20‑day EMA or on a break above the recent high (≈ 108.5) with a stop at the 20‑day EMA. For longer‑term investors, the contract strengthens the case for maintaining or modestly increasing exposure to AECOM, given the expected earnings uplift and the likelihood of subsequent phases. Keep an eye on Saudi‑government policy announcements and any additional AECOM contract disclosures, which could further lift the stock.