UBS upgrades Intertek to 'buy' after recent sell-off

Intertek's shares were given a boost on Friday after an upgrade by UBS from 'neutral' to 'buy', with the bank saying it sees a "positive risk-reward" balance despite the company's exposure to the recent plunge in oil prices.UBS has lowered its target price for the shares of the product testing and certification company from 2,600p to 2,900p after recent selling pressure.The stock has fallen by around 30% over 2014 after a "challenging year", with pressures in the miners and energy markets amid weak macro conditions, the bank said.It admitted that the current organic growth slowdown is unlikely to improve in the coming two years, in part due to the tough oil and gas environment.However, after the recent sell-off, the stock now trades at 16 times earnings compared with its long-term average multiple of 18. This, UBS said, is an "attractive entry point where we still admire the long-term fundamentals".As for the oil and gas markets, which account for 40% of Intertek's revenues, spending has already been under pressure due to weak profitability in the sector, and this has now been "exacerbated" by the recent fall in oil prices.UBS expects oil prices to remain below $90 a barrel over the next three years and anticipates a "prolonged decline" in spending by exploration and production companies.This pressure should be mitigated somewhat be continuing organic growth in the commercial and consumer sectors. Meanwhile, bolt-on acquisitions or "larger-scale deals" are also possible, UBS said.Intertek was trading 3.4% higher at 2,340p by 11:21.