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Broker snap: Petrofac fully valued

Charles Stanley said oilfield services firm Petrofac put in a strong first half performance, but that has not stopped the broker from downgrading the stock after the recent good run for the shares.

Though the order book has slimmed down in the first half of 2010, Petrofac's markets remain buoyant and the future is looking bright for the company, the broker thinks.

"In terms of the outlook, Petrofac expects like-for like net profit growth for the full year excluding the gain on the EnQuest demerger, of around 20%. As the 2009 comparable base is $341m net profit, it implies $410m profit for 2010, which appears to be in line with the current consensus estimate," notes Charles Stanley analyst Tony Shepard.

"Petrofac's large and growing order book continues to give a high degree of visibility to earnings over several years and unlike other peer Groups, Petrofac is predominately focused on the Middle East and is not involved in the deepwater industry. However, the share price has performed strongly and appears to reflect the immediate prospects," Shepard believes. As a result Charles Stanley has downgraded the stock from "accumulate" to "hold".

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