Berenberg downgrades Wood Group after outperformance

The bank said Wood Group’s annual results earlier this week were broadly in line with January’s trading statement but with a significant operating loss driven by $542m of impairments.

Management reiterated the expectations presented at November’s capital markets day (CMD), targeting mid- to high single-digit EBITDA growth in 2023, with materially lower exceptional cash payments in 2024/25, it said.

"This outlook is supported by a backlog for delivery this year up by 10% yoy and headcount up by 8% yoy, which point to high single-digit revenue growth in 2023, ahead of current consensus," Berenberg said.

It noted the share price is up 33% since the approach from Apollo Global Management became public on 22 February, with further 15% upside from the latest offer from Apollo at 237p a share.

"If no deal is agreed, however, the shares may give up some of their gains, particularly given the recent sell-off in the broader oil-services sector," Berenberg said.