Liberum reassured by Petrofac update, but stays on the fence

17th Oct 2014 10:24

Liberum has maintained its cautious stance for oilfield services group Petrofac, but said that the company's third-quarter update on Friday should reassure investors.Petrofac said it is on track to hit its net profit target of $580m-600m this year, though this remains down on $650m in 2013 after a profit warning earlier in the year.The group's backlog expanded to $21.2bn by 30 September, up from $20.3bn at 30 June, helped by growth in the engineering, construction, operations and maintenance division."Petrofac achieved a number of operational milestones in the third quarter and management is confident of new orders in the second half," Liberum said."The market generally expected Petrofac to miss this year's guidance so confirmation should be met with some relief."Nevertheless, the broker reiterated its 'hold' rating and 1,112p target price for the stock."Beyond the implications of the high backlog, there are no hints about growth prospects in 2015. We remained concerned about growth expectations and multiple contraction. Petrofac has already been hit hard."The stock was 4% higher at 1,027p by 10:21.