Citi, UBS downgrade Amec but SocGen keeps at 'buy' after share price slump

(ShareCast News) - Amec Foster Wheeler shares were under pressure again on Friday, having suffered heavy losses in the previous session when the oil and gas engineering services company said it was cutting its dividend by half amid tough market conditions.Citigroup downgraded the stock to 'neutral' from 'buy' and slashed the price target to 630p from 1,050p.It said the company's "aggressive change of outlook" and move to protect the balance sheet highlights the fact the depth and length of the downturn continues to be under-appreciated by both oilfield services companies and markets.In addition, it pointed out that customer behaviour towards oilfield services is deteriorating, a trend reflected in continued issues around variation orders and payment terms."Although no debt matures in the short term, in the absence of specific proposals for additional financing, we struggle to see a scenario where the group retains its investment grade as the cash flow outlook deteriorates," Citi said.UBS also downgraded Amec, to 'neutral' from 'buy' and cut its price target to 600p from 875p, saying the company was not as resilient as it thought.It said the decision to cut the final 2016 dividend was an indication that the weak conditions would linger for longer than expected.The bank said one of the key points of its investment case was Amec's above average -dividend yield at around 5%, but the decision to halve the dividend in 2016 - albeit prudent - means the yield is now broadly in line with the European oil services average yield of 3.2% in 2016E and not a reason to be active buyers.It wasn't all bad news, though.Societe Generale chopped its price target on the stock to 715p from 1,061p and lowered its estimates for 2016 to 2018 but maintained its 'buy' rating saying Amec remains one of its two preferred stocks following the 25% share price drop on Thursday."In our view AmecFW continues to represent the best trade-off between the risks involved entering a likely extremely difficult 2016 year for oil services, and the potential rewards to come from an (unexpected) rebound in oil prices (if for example Saudi Arabia happened to cut its production either unilaterally or in coordination with other producers)," it said.At 1220 GMT, Amec shares were down 4.4% at 548.50p.