Broker tips: Weir, Croda, easyJet

Credit Suisse upgraded shares of Weir to 'outperform' from 'neutral' on Tuesday, pointing to an "attractive" entry point as we enter a period of compounding growth.

The bank noted that Weir's share price has underperformed its European mining equipment peer group by 28% in the last three months following its slower fourth-quarter order intake and said this has created a buying opportunity.

It also said there are strong fundamentals for Weir's mining end market that can see the company establish status as a higher quality, aftermarket driven, earnings compounder.

"Tied into this we also see opportunity for free cash flow conversion to improve after the integration of Esco and the disposal of O&G and we forecast 77% conversion in 2021E-23E compared to cumulative 49% conversion in 2016-20," CS said.

The bank said its 2022 EBITA forecast is 3% ahead of consensus and its price target of 2,150.0p is unchanged.

Citi reiterated its 'conviction buy' rating and 7,400.0p price target on Croda International on Tuesday following its acquisition of Spanish fragrances and flavours company Iberchem for €820.0m.

The bank said the acquisition is a "game changer" for the specialty chemicals company.

"Established positions in rapidly growing Emerging Markets, speed-to-market focus and ability to cross-sell products over Iberchem and now Croda platforms, support our expectations for low double-digit growth rates," it said.

"This is made possible with a combination of 8% per annum organic growth and synergies of 5% per annum on average over the next five years."

Citi said that this, coupled with a premium personal care recovery and Croda's role in vaccines, lead it to reiterate its recommendation.

Liberum downgraded its recommendation on shares of budget airline easyJet on Tuesday to 'hold' from 'buy' as it said the risks and opportunities are now balanced.

The broker, which has a 1,000.0p price target on the shares, said the traffic light system for international travel confirmed by the government gave some transparency on the framework to be used, but no visibility on which countries might fall into each category.

"The risks are rising that there will remain significant restrictions on European air travel this summer," said analyst Gerald Khoo.

"We remain positive on the long-term recovery in air travel and the outlook for easyJet, underpinned by self-help structural action on costs.

"We believe concerns about the impact of aircraft sale and leaseback transactions on aircraft ownership costs are overdone, with the balance of power clearly in favour of the airlines rather than the leasing companies.

"However, at current valuation levels…we believe the long-term upside is suitably balanced by the short-term downside risks."