JPMorgan upgrades Rotork to 'overweight'

"With the shares now trading near relative lows versus the sector, we see risk/ reward as more favourable, particularly with organic order growth likely to see improved momentum post a period of lower growth, a development we believe will increase investor conviction in the growth story, which is key for the shares to outperform," it said.

"We believe the group’s trading update on the 20 November should be supportive of this trajectory while in the interim, Rotork has one of the more favourable end market exposures in our coverage (particularly in the event of a macro deterioration) and a structurally attractive mid-term story, with additional upside support from a strong balance sheet."

JPM said it expects order momentum to improve. It noted that organic order and revenue growth has underperformed peers during this O&G recovery but it expects to see order momentum improve now.

This will be driven by Rotork’s higher exposure to midstream and downstream O&G where growth has lagged upstream so far; the lag in actuator orders versus valve orders and long lead times in some projects e.g. LNG; the Growth+ strategy.

The bank also argued that there is "plenty" of balance sheet optionality. It said Rotork has been disciplined on M&A and it expects this to continue. However, it sees scope for further bolt-ons and buybacks.

"We see potential firepower of circa 7% of the market cap just by using its net cash position," JPM said.