Canaccord Genuity cuts Wood Group to 'sell'

Canaccord Genuity has downgraded energy services outfit Wood Group from 'hold' to 'sell' and cut its target price from 650p to 625p following the recent strong gain in the shares."Wood Group gave guidance for 2015 with its AGM statement earlier this week, having received greater customer feedback on the outlook," said analyst Alex Brooks, who labelled the guidance as "uncharacteristically optimistic"."Although we are moving up our number marginally for this year, we are still well below consensus, and after the near 40% rally in the stock year-to-date we are downgrading to 'sell'."Brooks said Wood Group's operations and maintenance business, PSN, will be affected by the recent slowdown in US shale output which will more than offset cost-cutting measures.The analyst said: "We therefore think earnings will miss for this year, with downgrades for next year, and that WG's near 30% premium valuation against its UK and European peers will diminish."Brooks also said that the recent turnaround in US rig counts, while positive, will only feed through slowly to benefit business at Wood Group.The stock was trading 0.8% lower at 707p by 10:57.