Broker tips: Petrofac, Friends Life, Kingfisher

Credit Suisse has cut its recommendation on Petrofac from 'outperform' to 'neutral' in the aftermath of a profit warning from the oilfield services group that sent shares tumbling on Monday.

"Although the moving parts in the guidance are relatively clear, we feel the main sentiment driver will be the admission that project execution has fallen well short of management's exalted record, lowering confidence over the quality of future earnings," said Credit Suisse analysts David Thomas and Jason Turner.

Charles Stanley has lowered its rating for Friends Life Group from 'hold' to 'reduce', saying that the potential £5.6bn takeover by Aviva has created an "attractive opportunity to cash out".

Charles Stanley said that given that the offer price is based on Aviva's own share price, any further selling pressure on Aviva's stock "could render the (all-stock) deal unviable". The broker said that it "may be prudent to crystallise gains to take advantage of the recent speculative rally".

An "uninspiring" trading update from DIY retailer Kingfisher on Tuesday is unlikely to change analysts from sitting on the fence about the stock, according Hargreaves Lansdown Stockbrokers.

"The difficulties which the new Chief Executive will inherit have been well documented and, for the moment, show few signs of abating," said head of equities, Richard Hunter. "The general market view of the company is unlikely to be moved by Kingfisher’s update, and currently stands at a 'hold', albeit a strong one.”