Goldman Sachs downgrades Rotork after outperformance

The bank noted that since being added to the buy list in January, the shares are up 9% versus the FTSE World Europe up 12%. In the last two months, the stock is up 18% thanks to confidence in 2017/18 consensus estimates, supported by improving sentiment and competitor read-across, and higher oil prices.

"That said, we think recovery for some end markets remains uncertain, not least for original equipment in downstream / midstream Oil & Gas and power. We like Rotork as a business but on recent share price strength see better opportunities elsewhere."

Goldman said it continues to expect organic sales growth of 3%/5%/5% in 2017/18/19, predicated on inflecting order intake and positive signs in upstream, water and general industrial end markets.

The bank pointed to the fact that there is uncertainty surrounding the appointment of a new chief executive officer, with a search underway but a new boss unlikely to start before the first or second quarter of next year. "As such, Rotork’s long-term evolution remains uncertain and significant cost-tackling measures are unlikely to be enacted in the short term."

Goldman said it prefers exposure to upstream through Weir Group and to recovering maintenance, repair and overhaul through Smiths Group.

At 0935 BST, Rotork shares were down 2.1% to 266.50p.