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Wood Group flows higher as Berenberg lifts it up to ‘buy’

If synergies from the Amec Foster Wheeler acquisition come through as planned, Berenberg says the “outlook is bright”

offshore well
Wood Group completed the £2.2bn acquisition of Amec Foster Wheeler almost two years ago

A bullish ‘buy’ note from Berenberg put a rocket under the shares of Wood Group (John) PLC (LON:WG.) on Friday.

Shares in the oilfield services group rose were up almost 4% to 491p in early afternoon trading, after analysts at the venerable German investment bank moved their recommendation to ‘buy’ from ‘hold’.

The number crunchers also hiked their price to 590p, from 560p previously.

READ: Wood Group thanks Donald Trump as first-half profits soar

“We believe that the group’s sharp underperformance this year has been driven by fears around cash generation, which have largely been as a result of the Amec Foster Wheeler acquisition,” said Berenberg in a note to clients.

“As cost synergies are delivered and legacy projects and exceptional integration costs roll off, we expect steady top-line growth underpinned by strong FCF, leaving the stock attractively valued.”

Berenberg increased its earnings estimates by 2% for the current year and by 7% for next year, “due to higher margins assumed”.

It now expects earnings of 37p per share on sales of £11.55bn in 2019, followed by earnings of 42p per share on sales of £12.04bn in 2020.

Quick facts: Wood Group (John) PLC

Price: 421.6 GBX

Market: LSE
Market Cap: £2.89 billion


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