Credit Suisse upgrades Weir, cites 'attractive' entry point

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 2,150p is unchanged.

At 1230 BST, the shares were up 1.7% at 1,875.50p.