Shares in Petrofac, the UAE-based oil and gas infrastructure firm, fell by 4.3% to 1,467 pence on Friday after a downgrade by a leading investment bank.
The downgrade of the FTSE 100 firm by JP Morgan Cazenove from “overweight” to “neutral” was driven by skepticism that Petrofac can bolster its backlog to the $8 billion-plus needed through 2012 to meet investor expectations for 2013 revenue.
Analyst Andrew Dobbing said in a note to investors that “lower than usual transparency in Petrofac’s bid pipeline largely driven by increased exposure to frontier markets” puts a squeeze on the shares’ value outlook.
The bank has kept its 1,699p target price for the shares.
“We maintain a very positive long term outlook on Petrofac and make no changes to our earnings forecasts, but with the share price approaching our fair value, and with little scope for near term earnings upgrades we downgrade,” said Dobbing.
Analysts are generally positive on Petrofac, citing the strength of its core EPC business. Ahead of announcing its annual reslts the company said it expects to have seen net profit growth of “at least” 20% in 2011 and a backlog at 31 December 2011 of approximately $10.6 billion.
The company’s integrated services division has agreed to pair up with Schlumberger – a rumoured suitor – to better bid for large projects combining drilling, oilfield services and infrastructure.
The company welcomed two new directors, René Médori and Marwan Chedid, to its board on Thursday.
Médori, who is finance director of mining company Anglo American, becomes a non-executive director and Chedid, a Petrofac veteran who joined in 1992, joins as an executive director and chief executive responsible for the company’s core Engineering, Construction, Operations & Maintenance division.
