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On Thursday, HSBC analyst Stephan Klepp upgraded Spirax Group PLC (LON:SPX:LN) (OTC: SPXSY) stock rating from Hold to Buy, setting a price target of £82.00. The move follows a period of volatility for Spirax’s share price since the beginning of the year, which Klepp suggests may reflect a lack of strong conviction in the investment case among market participants. Despite a -31.93% decline over the past year, the stock has gained 7.08% year-to-date. InvestingPro data shows the stock’s RSI indicates oversold territory, potentially supporting HSBC’s upgrade timing.
Klepp’s assessment includes the latest foreign exchange (FX) expectations from Spirax’s management and considers the company’s valuation attractive. Trading at a P/E ratio of 27.55x and maintaining a solid financial health score of "Fair" according to InvestingPro metrics, the company shows mixed signals. He notes the conservative guidance for 2025 and anticipates that the medium-term targets are likely to be met at the lower end of the range by 2027, adjusting expectations from the upper end due to FX tailwinds.
The analyst’s commentary highlights the positive medium-term outlook for Spirax, crediting the management team for their progress in addressing short-term challenges. Klepp points out that the execution in the Energy Technology Solutions (ETS) business has improved, which is a key factor in rebuilding investor trust after two difficult years and the associated derating of the stock.
Spirax Group PLC is expected to continue focusing on operational execution to maintain and enhance investor confidence. The upgrade to a Buy rating by HSBC reflects an optimistic view of the company’s potential to overcome recent hurdles and achieve its medium-term financial goals.
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