Broker snap: Visibility a concern at Petrofac, says Investec

13th Aug 2012 10:20

Petrofac may have announced that it is on track to hit its full-year guidance but Investec has maintained its 'hold' rating and 1,500p target price on the stock, saying that it is 'still worrying about the future'.The interim results were slightly ahead of expectations, but with a bit more caution on the pace of growth for the second half. Nevertheless, full-year guidance of at least 15% net profit growth for the full year is unchanged."However, the market has been and remains more concerned with FY13," the broker said in a research report on Monday morning."Although 1H12 contract wins have just kept the order book on track (only a 4% decline since December after recent awards), delays in some contract awards to refill the core E&C [Engineering & Construction] backlog will not now occur until 2013, making it more difficult to maintain revenue and profits in this key division and underpin growth forecasts for that year."While Investec reckons that Petrofac's rating is not out of line with its large-cap peers, it says that until greater clarity is seen on the evolution of the E&C backlog into 2013 and also the potential margin achievable ("as well as project delivery from the IES division"), its neutral stance on the shares will be maintained.By 11:04, shares were down 5.06% at 1487.75p.BC