RBC downgrades Vesuvius to 'sector perform'

RBC Capital Markets downgraded molten metal flow engineer Vesuvius to ‘sector perform’ from ‘outperform’ on Friday following the recent rally in the share price, which leaves the valuation more reflective of the opportunity.

The bank said it continues to see Vesuvius as an attractive self-help story with the potential to lift operating margins to the 12.5% medium term target management have set out.

"However, with the shares up 29% in the last three months versus the UK engineering sector up 10%, the shares are now on a price-to-earnings of 16x21E and 13x22E versus the group's 10 year average of 11.6x.

"As such we see the relative value opportunity as having largely been captured and we downgrade."

RBC lifted the price target to 550p from 480p, based on a target EV/sales of 1.1x, up from 1x previously.

At 1025 GMT, the shares were down 4.1% at 510p.