Berenberg lowers target price on John Wood

Berenberg said John Wood had reported 2020 results broadly in line with its trading update in January at both the revenue and underlying earnings levels and also highlighted that the company was drawing closer to settling its legacy bribery investigations.

The German bank stated that revenue looked set to be lighter in 2021, with the Wood's projects division still seeing low activity levels, although the analysts also noted that better activity in the group's higher-margin consulting business could help to offset this and give the company "a better mix of margins".

Berenberg also said cash flow generation was still moving in the right direction, enabling net debt to fall, although the analysts noted that settlement would "still weigh on 2021 cash flow", somewhat delaying Wood's expected cash flow recovery.

"Activity continues to improve though, and margins should improve further as the company continues to transition," concluded Berenberg, which reiterated its 'buy' rating on the stock.