NRW Holdings (ASX:NWH) is "very well placed" to continue penetrating the artificial intelligence and data center market, and boost its exposure to other sectors such as health, defense, and infrastructure, Jefferies said in a Thursday note.
The note followed the company's Fredon unit securing a AU$115 million design and construct mechanical contract for stage one of Stack's MEL03 hyperscale data center in Melbourne.
The contract will likely provide additional revenue of AU$185 million over subsequent stages, the investment firm said.
It added that while electrical is among the most labor constrained trades, Fredon has roughly 1,000 electrical technicians and does not appear to be people-constrained from winning further electrical-exposed work.
"We have a positive view on [NRW Holdings] and particularly Fredon, but at present, see a degree of re-contracting risk (though much less post Karara re-sign), combined with elevated valuation metrics," the equity research firm said.
Jefferies maintained a hold rating on NRW with a price target of AU$7.60.
The company's shares rose past 2% in recent Thursday trade.