Macquarie ups Amec Foster to 'neutral'

“In our view, the time has come to close out underweight positions and we upgrade our recommendation to neutral.

“Near-term catalysts for underperformance are slim and the current multiple is far more reflective of the challenges that are faced in turning around the company,” it said.

Macquarie said it has better digested last month’s update and downgraded its Clean Energy revenue assumption for next year.

It now expects this to fall 24%, compared to 8% previously, and said this is “more in tune with commentary of a significant decline” in Solar revenues.

Overall, ex-Global Power Group, it reckons group revenues will decline by 9% in 2017.

Macquarie said it could not rule out a dividend cut.

Due to weakening FX, it expects that post disposals, Amec will still have net debt/EBTIDA of 2.4x, above the 2.0x it has historically said it is comfortable with.

“To get down to that level, net debt would need to fall by a further £130m and cutting the dividend would get them towards this (£85m annual saving),” it said.

At 1020 GMT, Amec shares were up 2.6% to 425.20p.