Event

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We are downgrading our recommendation on GEI from 1-Sector

Outperform to 2-Sector Perform.

Implications

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GEI shares performed well last year with strong financial results and

dividend growth. Valuation expanded as investors gained comfort with

the outlook for an increased reliance on infrastructure relative to

services in the business mix.

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The stock had another leg up following the acquisition of oilfield

services company OMNI. Accretion from the deal and the

accompanying dividend increase helped boost the shares to new highs.

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We believe the stock may pause this year as investors monitor

performance in the services business and determine the extent of new

growth and/or cash flow volatility OMNI may introduce.

Recommendation

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GEI shares have reached valuation levels comparable to infrastructure

companies and much higher than most services companies. Risks and

rewards are now balanced rather than tilted to the upside in our view, and

we are changing our investment recommendation accordingly.

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