RBC Capital Markets downgrade Rotork to 'sector perform'

RBC Capital said it had upgraded Rotork to 'outperform' in March 2022, reflecting "a more favourable" outlook as nearly half of its sales were into oil and gas.

The Canadian bank highlighted that while supply chain impacts had held back growth, the order has continued to grow, and Rotork had seen an acceleration in second-half revenues.

"The positive fundamental case is unchanged in our view, and we expect this to continue to develop in 2023," said RBC.

However, the analysts stated that with the share outperforming its group by roughly 10% over the past 10 months, they see the relative upside as now being "somewhat more limited".

"Our price target for Rotork is set at 340.0p and this supports our 'sector perform' rating. We continue to use enterprise value/sales for our valuation base case and assume a target of 4.0x in line with the post-financial-crisis average level," said RBC.

Reporting by Iain Gilbert at Sharecast.com