Glasgow specialist engineer Weir (WEIR) slips 0.2% to £17.31 as investment bank UBS downgrades its rating from 'buy' to 'neutral'.
Weir is a big supplier of equipment such as valves, pumps and compressors to shale operators in North America and has been badly hit by the downturn in activity here. But after a strong run from lows hit in February UBS says the company is now pricing in a 60% uplift in oil and gas revenues.
Analyst Mark Fielding concedes a return to the previous peak would imply a 200% uplift at current exchange rates but adds 'we do not expect a recovery of this level in the near term, if ever'. He is forecasting more modest growth of 32%.
His price target actually increases to £18.30 from £15.00 reflecting the stratospheric rise in the share price from the lows seen in February as investors have taken their cue from recovering oil prices and a currency tailwind from the weak pound.
'The key driver is the oil & gas recovery, in our opinion, and we do expect a strong medium-term recovery,' Fielding adds. 'However, we are downgrading to Neutral as a lot already looks to be in the price for this.'
