Wood Group drops after mixed update - UPDATE

Energy services giant Wood Group has said that it expects to deliver good growth this year, with overall conditions in energy markets remaining 'favourable'.However, shares were down by 4.36% at 735p in afternoon trade on Tuesday after the company reported mixed conditions in its Engineering and GTS divisions."Overall, performance for 2012 is anticipated to be in line with expectations," Wood Group said."We anticipate further good growth in 2013 and remain confident in the longer term prospects for the group's market leading services in oil & gas and gas fired power generation markets."The company expects its Engineering division to report over 30% growth in 2012 earnings before interest, tax and amortisation (EBITA).In upstream, while the group is making progress in its projects in Australia and Angola and remains active in projects in the Gulf of Mexico, it did admit that it expects "some reduction in activity" in the Canadian oil sands market in 2013.In subsea and pipelines, the company said that it continues to see good activity levels in onshore pipelines in North America. However, in downstream, Wood Group said that the market outlook remains "subdued", though it has seen some improvement in the second half.Elsewhere, Wood Group PSN, which provides brownfield services to the oil and gas industry, has been boosted by a strong performance in the North Sea and in North America. Meanwhile, turbo-machinery division Wood Group GTS has benefitted from the contribution from its oil and gas related activities. However, it also revealed that it has recognised reduced margins on its contract with GWF.Credit Suisse cuts forecastsCredit Suisse said that it has cut its Wood Group forecasts for 2013 and expects consensus forecasts to come down also, largely on softer GTS profits. "In GTS, large lump-sum contracts (GWF, as flagged earlier in the year) are less profitable than hoped, and we have brought our earnings down modestly, offset by anticipated good demand from higher run-time on US turbines," the broker said.Credit Suisse maintained its 'neutral' rating and 925p target price for the stock, "largely as we believe this high-quality name is fairly priced at current levels".