Broker tips: Berkeley Group, John Wood Group

Analysts at Canaccord Genuity lowered their target price on homebuilder Berkeley Group from 5,400.0p to 5,200.0p on Friday, highlighting recent share price underperformance.

Canaccord stated that given Berkeley's "stellar track record of outperformance" through the pandemic, it was worth noting that its share price had "severely underperformed" the wider sector by more than 30% over the last six months.

In its analysts' view, Berkeley's recent update was "quite reassuring", with the group continuing to trade "robustly", with strong forward sales as it remains on track for the full-year.

"We believe the group is in a good position to bring its numerous sites into production, as planned, to support significant volume and profit delivery over the medium term, likely to be delivered in the context of relatively little new build being undertaken in London," said Canaccord.

"The over circa 30% underperformance of the shares over the last six months relative to the sector strikes us as a good opportunity for longer-term investors to invest in a strongly positioned house-builder with an effective strategy and strong track record of outperformance over the cycle"

Analysts at Berenberg lowered their target price on oil field services provider John Wood from 400.0p to 360.0p on Friday but stated the company still appeared to be moving "in the right direction".

Berenberg said John Wood had reported 2020 results broadly in line with its trading update in January at both the revenue and underlying earnings levels and also highlighted that the company was drawing closer to settling its legacy bribery investigations.

The German bank stated that revenue looked set to be lighter in 2021, with the Wood's projects division still seeing low activity levels, although the analysts also noted that better activity in the group's higher-margin consulting business could help to offset this and give the company "a better mix of margins".

Berenberg also said cash flow generation was still moving in the right direction, enabling net debt to fall, although the analysts noted that settlement would "still weigh on 2021 cash flow", somewhat delaying Wood's expected cash flow recovery.

"Activity continues to improve though, and margins should improve further as the company continues to transition," concluded Berenberg, which reiterated its 'buy' rating on the stock.