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Investing.com - Stifel downgraded WEIR Group Plc. (LON:WEIR) (OTC:WEGRY) from Buy to Hold on Monday, while raising its price target to GBP27.00 from GBP26.00, citing valuation concerns after the stock’s recent rally. According to InvestingPro data, the stock’s RSI suggests it’s currently in overbought territory, with shares trading near their 52-week high of $17.81.
The engineering firm’s shares have climbed approximately 35% since early April, outpacing the FTSE100’s 17% gain during the same period. InvestingPro data shows impressive returns of 41.91% over the past year and 24.54% in the last six months. This rally has pushed WEIR’s FY25E price-to-earnings ratio to approximately 21x, which Stifel believes largely reflects the company’s improved fundamentals. Want deeper insights? InvestingPro subscribers have access to over 10 additional exclusive tips and comprehensive financial metrics for WEIR Group.
Stifel pointed to recent market sensitivity in the sector, noting how shares of peer company Epiroc fell sharply last week on modestly disappointing order data. The research firm suggested this reaction demonstrates how sensitive stocks in this sector have become to any negative news given elevated market expectations. Despite market volatility, WEIR maintains strong fundamentals with an "GREAT" overall Financial Health score from InvestingPro, supported by a healthy current ratio of 2.32 and moderate debt levels.
While Stifel expects solid progress from WEIR in its first-half results due July 31, including Minerals OE orders boosted by a recent £40m tailings contract, it noted the company will need significant sales growth acceleration in the second half to meet full-year estimates.
The research firm also highlighted potential headwinds, including mix challenges from rising mining OE orders and execution risks with the high-multiple Micromine acquisition, which was purchased for 10x EV/sales, though it continues to view WEIR’s industry positioning favorably.
In other recent news, WEIR Group Plc has been the subject of several analyst upgrades, reflecting a positive outlook on its financial and operational strategies. Citi upgraded the company from Neutral to Buy, citing its exposure to the mining sector and valuation as key factors. The investment bank sees potential for earnings growth driven by favorable commodity prices and a robust mining production outlook. Similarly, Kepler Cheuvreux upgraded WEIR Group to Buy, raising the price target slightly to GBP27.00, following the company’s acquisition of Micromine for GBP624 million. This acquisition is expected to enhance WEIR Group’s financial performance, particularly in the aftermarket sector.
UBS also upgraded WEIR Group to Buy, increasing the price target to GBP28.50, based on the company’s Performance Excellence plan, which aims to deliver substantial cost savings. UBS estimates these savings could reach £125 million by the end of 2026, exceeding current guidance and translating into a higher adjusted EBITA margin. The analysts at UBS believe that WEIR Group is well-positioned to navigate economic challenges while benefiting from its strategic initiatives. These upgrades from Citi, Kepler Cheuvreux, and UBS highlight a consensus among analysts about WEIR Group’s potential for growth and operational efficiency improvements.
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