JPMorgan Cazenove lifts Bodycote to Neutral, hikes target price

The brokerage said first-half 2016 for UK Capital Goods sector, which encompassed all of these equities, was generally solid and in line.

"Outlook guidance was largely unchanged, consistent with a stable but not improving backdrop," JPMorgan Cazenove said in a research note.

"Our 2016/2017 EPS estimates have moved up 2%-4% on average post results, albeit with some help from FX and a few star performers," it added.

Looking into the second half, JPMorgan Cazenove said the sector as a whole appeared to be on track for the full-year estimates.

Bodycote's upgrade in recommendation was accompanied with a hike in price target to 605p, from 565p previously.

"We see our Underweight thesis on Bodycote as having largely played out," the brokerage said.

"Our estimates are no longer meaningfully below 2016 Bloomberg consensus EPS, end markets and the margins expectations better reflect the outlook," it added.

"The shares have reached a level we see capturing the ongoing risks in what remains a weak backdrop."