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On Friday, Kepler Cheuvreux analyst William Mackie upgraded WEIR Group Plc. (WEIR:LN) (OTC: WEGRY (OTC:WEGRY)) stock from Hold to Buy, adjusting the price target to GBP27.00 from GBP26.80. The upgrade comes following WEIR Group’s first-quarter trading update and its recent acquisition of Micromine for GBP624 million. The company, currently trading at $16.21 with a market capitalization of $8.36 billion, shows promising fundamentals according to InvestingPro data, with a notably low PEG ratio of 0.52 indicating attractive valuation relative to growth.
In his report, Mackie notes that the forecasts for the company’s orders and revenue for the fiscal year 2025 remain largely unchanged. However, he has increased the estimates for 2026 and 2027, citing strong market momentum, particularly in the aftermarket sector. The revised estimates take into account the acquisition-related one-off costs and the continued cost actions under the company’s Performance Enhancement Programme (PEP), which are expected to have a more positive impact from 2026 onwards. The company’s solid financial position is evident in its healthy current ratio of 2.32 and annual revenue of $3.14 billion, with EBITDA reaching $572 million.
Mackie’s adjustment to the price target to 2,700p reflects a slight increase while maintaining the firm’s valuation metrics. The upgrade to a Buy rating is based on positive expectations for the company’s end-markets, specifically in the ESCO and Minerals segments, as well as the strategic benefits anticipated from the acquisition of Micromine.
The acquisition of Micromine is seen as value-accretive, and it is expected to contribute to the company’s financial performance. The PEP, which is aimed at enhancing WEIR Group’s operational efficiency, is also anticipated to start delivering a more significant impact on the company’s earnings before interest, taxes, depreciation, and amortization (EBITA) starting in 2026.
The report by Kepler Cheuvreux indicates optimism about WEIR Group’s future performance, with the analyst expressing confidence in the company’s market position and the potential for growth in the coming years. The company’s strategic moves, including the Micromine acquisition and the ongoing PEP, are expected to bolster its financial and operational strength. InvestingPro analysis supports this outlook, assigning WEIR Group a "GREAT" financial health score. For deeper insights into WEIR Group’s valuation and growth potential, along with additional ProTips, subscribers can access comprehensive analysis on InvestingPro.
In other recent news, WEIR Group has received an upgrade from UBS, with the stock rating lifted from Neutral to Buy. UBS analyst Ed Hussey has set a new price target of GBP28.50, up from the previous GBP22.50, reflecting a positive outlook on the company’s cost-saving initiatives. The company’s Performance Excellence program, initially announced in September 2022, has seen its cost savings guidance increase from £30 million to £60 million for 2023, and further to £80 million for 2024. UBS’s analysis indicates that WEIR Group might achieve even greater savings, estimating potential savings of £125 million by the end of 2026. This could result in an incremental +1.6% adjusted EBITA margin in 2026, with UBS forecasting a margin of 23.4% compared to the consensus estimate of 20.4%. The market, however, currently only accounts for £80 million in savings. UBS also highlights WEIR Group’s resilience in facing economic downturns and the benefits anticipated from the Performance Excellence plan. This upgrade serves as a strong indicator of WEIR Group’s potential for improved financial performance through robust cost management and margin improvements.
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