RBC upgrades Weir on balanced risk/reward

Weir got a boost after RBC Capital Markets upgraded its stance on the stock to ‘sector perform’ from ‘underperform’ and lifted the price target to 1,200p from 1,150p.

“We believe the risk/reward at Weir is now reasonably balanced, with the shares valued at close to 14x trough earnings,” it said.

The bank said concerns over price-downs in the minerals division may have been overdone and it expects to see the trading performance of the oil and gas business bottom soon.

“It remains difficult to forecast recovery, but when it comes, strong sales growth and high operational gearing will likely result in future earnings higher than our 2017 forecast of 98p.”

RBC said Weir's end-market exposure offers potential for structural growth medium-term and its historical above average return on sales and invested capital is sustainable.

At 1110 GMT, Weir shares were up 3.5% at 1,177p.