Petrofac hit by earnings fears -UPDATE

-Adds further references to recent Credit Suisse research

Petrofac led the FTSE 100 down as Europe's energy engineering majors dropped over fears that industry earnings would be lower than expected.

The industry-wide drop began after Saipem SpA, Europe's largest energy engineering firm, cut its profit forecast.

The announcement that 2013 earnings before interest and tax would be €750m, compared with analyst estimates of €1.7bn, led around a dozen brokers to cut their ratings on the Italian firm.

This helped push Petrofac's price down as much as 7.9% in morning trading on Wednesday.

The news hit Paris-based Technip SA, which also fell 7.9%, while Subsea 7 led Norway's oil services sector down.

Petrofac has been seen as a good bet recently by analysts, with Nomura noting on Tuesday that the firm was well positioned to take advantage of opportunities in the Middle East in the first half of the year.

In a similar vein, on Monday Credit Suisse named Petrofac and AMEC amongst its favourites in the sector (and warned of possible weak guidance from peers).

This morning, however, the Swiss broker wrote to clients that "[Saipems profit-warning is] likely to lead the whole sector down: The clearest read-through is to Subsea7, another company with a low level of estimated backlog for 2013 active offshore. Technip's more cautious comments on 2013 estimates will likely be read even more negatively, and Petrofac may also be affected as the closest peer to Saipem's onshore construction division."

AB

Recommended

HubSpot: a tech stock set to tumble
Trading

HubSpot: a tech stock set to tumble

US tech stocks have had a fantastic couple of years. But this year is unlikely to be so bullish for high-fliers that can’t turn big profits.
18 Jan 2022
How to be better at selling stocks
Investment strategy

How to be better at selling stocks

There is plenty of advice around about buying stocks, but not so much about when you should sell. John Stepek explains the two key things to know abou…
14 Jan 2022
Share tips of the week – 14 January
Share tips

Share tips of the week – 14 January

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
14 Jan 2022
Fintech: how to profit as technology transforms banking around the world
Share tips

Fintech: how to profit as technology transforms banking around the world

Financial technology – from apps to APIs to the cloud – is rapidly transforming financial services. This will spell doom for some incumbent firms, whi…
14 Jan 2022

Most Popular

Five unexpected events that could shock the markets in 2022
Stockmarkets

Five unexpected events that could shock the markets in 2022

Forget Covid-19 – it’s the unexpected twists that will rattle markets in 2022, says Matthew Lynn. Here are five possibilities
31 Dec 2021
US inflation is at its highest since 1982. Why aren’t markets panicking?
Inflation

US inflation is at its highest since 1982. Why aren’t markets panicking?

US inflation is at 7% – the last time it was this high interest rates were at 14%. But instead of panicking, markets just shrugged. John Stepek explai…
13 Jan 2022
Tech stocks teeter as US Treasury bond yields rise
Tech stocks

Tech stocks teeter as US Treasury bond yields rise

The realisation that central banks are about to tighten their monetary policies caused a sell-off in the tech-heavy Nasdaq stock index and the biggest…
14 Jan 2022