Goldman Sachs has reiterated its 'conviction buy' rating for oil and power services firm Wood Group, saying that the company's strong positioning in the market is not reflected in the stock's valuation.The bank said that Wood Group has underperformed the wider European oil services sector by around 15% since its announcement in December of a weaker outlook for its Engineering business."We view Wood Group as a structural leader (first quartile on our industry positioning framework versus the sector) well placed in a flatter demand environment to deliver superior revenue growth through acquisitions, the pass-through of wage inflation and strong growth in the US shale plays," Goldman said.It believes the valuation - trading at a 2014 price-to-earnings multiple of 10.4 compared with the wider sector at 12.2 - is "attractive", given the company's strong free cash flow generation and potential for significant dividend growth.Wood Group is expected to reiterate its current-year outlook with a "solid update" when it reports its 2013 results on February 18th. Goldman highlighted that the PSN division - "an opex-driven business which should see more stable earnings through cycle" - now comprises a greater proportion of the overall business. Meanwhile, there could be some progress announced on improving profitability in the legacy project in Oman, which the market would take positively."We believe that the stock will re-rate versus the sector as confidence grows in the earnings and free cash flow delivery of the company."A 852p target price was maintained.The stock was trading 0.8% higher at 657p by mid-morning on Thursday.BC