JPMorgan Cazenove upgrades Bodycote after pullback

Bodycote, which provides heat treatment services and specialist thermal processes, was boosted on Thursday as JPMorgan Cazenove upped the stock to 'overweight' from 'neutral' and bumped up the price target to 960p from 850p.

The bank noted the shares are off around 12% from recent highs and said the pullback is a buying opportunity.

Other reasons why the stock is an opportunity include the consensus upgrades to come with the 6 March results, an attractive near-term relative and absolute valuation and a potential special dividend with the March numbers.

"We believe consensus is underestimating the impact of the broad-based pick-up in demand and the potential for Bodycote to overshoot underlying market development as customers restock," it said.

JPM upped its 2017/18/19 earnings per share forecasts b 2%/7%/10%, putting its forecasts 1%/7%/9% ahead of Bloomberg consensus.

The bank said the aerospace division is inflecting after a period of slow/no growth as the US business picks up and the UK continues to recover, while the oil and gas arm should see a continued improvement in US onshore even if the scale and timing is harder to forecast.

Automotive is the big question mark, however. "Europe should grow low single-digit year-on-year but the US is slowing from peak and much will depend on market share and content-per-vehicle gains with 2018 something of a test-case for this company-specific narrative."

At 1555 GMT, the shares were up 3.8% to 921.50p.