Arabtec Holding Co. gained the most in more than four months as Bank of America Merrill Lynch recommended investors buy the stock after the Dubai-based builder secured a contract.
The shares of the company, which helped build the tallest skyscraper in the world, advanced 5.5 percent, the biggest jump since Sept. 15, to 3.09 dirhams at the close in Dubai. Arabtec said today its construction unit was awarded a contract to build a 2.59 billion dirham ($705 million) mixed-use project in Abu Dhabi. BofA lifted the shares from underperform after the announcement and revised its price estimate to 3.6 dirhams from 1.98 dirhams.
Contractors and property companies are benefiting from resurgence in the United Arab Emirates’ real estate market, where prices more than halved at the peak of financial crisis. BofAML said the domestic market has been Arabtec’s main growth source and its backlog could be 15 percent higher than previous forecasts, reaching 42 billion dirhams by the end of 2014.
“This supports a more-optimistic stance on the company’s ability to secure further sizeable projects in an increasingly buoyant construction market,” Faisal Alazmeh, a Dubai-based analyst at BofAML, said in a research note today. “We see significant scope for improvement” in Arabtec’s business in Qatar and Saudi Arabia, Alazmeh said.
The shares of the largest publicly traded contractor in the U.A.E. rose more than 54 percent in 2013 and have gained 7.7 percent this year, outpacing Dubai’s benchmark in January.