UBS has downgraded engineering giant Weir Group PLC (LON:WEIR) to neutral from buy, cutting the price target from 1,550p to 1,450p.
The broker said the global mining sector, on which Weir is heavily reliant, is suffering low raw material prices and tough comparative in an uncertain macroeconomic scenario, leading to a slowdown in capital expenditure growth.
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The Scottish FTSE 250 firm is still believed to be risk-balanced, on the back of a “strong” pipeline of original equipment opportunities and the recent £100mln order for a magnetite iron ore project in Australia, its biggest one so far.
Earnings before interest and tax are forecast to grow at an annual compound rate of 8% to 2022, driven by “robust” growth in the minerals market due to maintenance investments and greenfield expansion, punctuated by some weakness in 2020.
After that, the oil and gas business will also pick up as US onshore capital expenditure intensifies, UBS reckons.
Forecast 2020 minerals revenue was cut by 6% to £1.5bn. Its 2020 revenue is now eRead More – Source
