Berenberg slightly lowers target price on John Wood Group

Berenberg stated John Wood was "uniquely placed" to pivot towards the energy transition when compared to other European oil service companies given that it was "asset-light" and able to apply its engineering and consulting expertise across "virtually all emerging renewable technologies".

However, the German bank also said the firm faced "several challenges" related to material legacy issues, which remain a "huge drag on cash flow". Berenberg, in turn, highlighted that clearing up these historical woes over the next two years would be "critical" to its investment case.

"We believe that investor fears about the balance sheet are overdone, and, if execution is solid, see a path to a rerating for the stock," said the analysts, which also reiterated their 'buy' rating on the stock.

"We adjust our estimates for the first-half results, and earnings per share falls 22%/26% for 2020/21, driven by a weaker joint venture result and higher than expected one-off items in the period."