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Broker views: Oil & gas, broadcasting and building materials

07 April 2017 15:56

Numis has been assessing whether Wood Group's (LON:WG.) acquisition of Amec Foster Wheeler (LON:AMFW), assuming it completes successfully, makes sense for its shareholders and concluded that the answer is "a clear yes".

The broker said: "Following in-depth pro-forma modelling and review we conclude that the deal makes compelling strategic sense for both companies, results in strong pro-forma key financial metrics and adjusted EPS accretion, but that the current share prices for both Wood Group and Amec fail to reflect this."

Numis has therefore upgraded Wood Group's price target to 929p per share (from 900p), Amec's to 670p (from 564p) and both companies to a buy rating (prior add and hold respectively).

Meanwhile, JP Morgan Cazenove downgraded broadcaster ITV (LON:ITV), which it said was due to indications of worsening advertising trends in the UK.

The City heavyweight commented: "Despite ITV's shift towards Content in recent years (now c.33% of Group revenues) advertising trends/NAR momentum remains the overwhelming share price driver.

"Our latest discussions with Media buyers indicate that UK advertising trends appear to have slightly worsened versus previous estimates - in particular in Retail advertising (with a 20% share ITV's largest category)."

JP Morgan trimmed its price target for the stock to 233p per share (from 235p).

Separately, equity research analysts at HSBC cut building materials and plumbing supplier Wolseley (LON:WOS) to hold from buy after lowering their target price to 5,150p (from 5,350p) to reflect the divestment of its Nordic business, lower estimates and multiples.

"Abating deflationary headwinds in the US seem to be factored into market expectations," HSBC added.

"US volume growth in plumbing and HVAC distribution is healthy, but further boost to our estimates requires better inventory turn."

At 3:55pm:

(LON:AMFW) Amec Foster Wheeler PLC share price was +10.25p at 567.75p

(LON:ITV) ITV PLC share price was -1.75p at 214.95p

(LON:WG.) John Wood Group PLC share price was +14.75p at 791.75p

(LON:WOS) Wolseley PLC share price was -25.5p at 4929.5p

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