After landing a multibillion-dollar Saudi Arabian contract in June, Fluor Corp.'s stock has dropped dramatically in the last week, a decline that analysts blame on Middle East tensions and investors' anxiety about the nation's economy.
The Irvine engineering and construction giant's stock closed Tuesday at $33.375 a share in New York Stock Exchange trading, having fallen nearly 22% from $42.50 since Aug 15.
"With all the publicity that accompanied Fluor's Saudi Arabian contract this year, a lot of people think the company sinks or swims by what goes on in the Middle East," said Herb Hart, an analyst at the San Francisco investment firm S.G. Warburg & Co.
In June, Fluor announced that it had received a contract--estimated by analysts to be worth several billion dollars during the next decade--to help boost oil production for Saudi Aramco, a government-owned oil company. Analysts said the contract signaled a resurgence of Fluor's once-lucrative petrochemical business in the Middle East.
But the Iraqi invasion of Kuwait and the U.S. military response, Hart said, have created a perception among investors that Fluor's business prospects have dimmed in the region.
Hart said investors are worried that rising oil prices resulting from the Middle East turmoil could push the U.S. economy into a deep recession and force manufacturers to cut back on new plant construction, a big business for Fluor.
Fluor spokeswoman Deborah Land said the decline in the company's stock price does not reflect any immediate loss of business, but concern about possible losses in the future.