Broker snap: BofA lifts target price for Weir Group

8th Apr 2013 15:46

Upbeat comments from Bank of America (BofA) had boosted the share price of industrial engineering firm Weir Group on Monday afternoon.Weir, a global engineering firm with nearly 200 manufacturing and service facilities around the world, was up 4.44% at 2,281p in afternoon trade after BofA highlighted more upside to its current share price. The group operates three main divisions: Minerals, which provides slurry handling and mine dewatering equipment; Oil and Gas, which makes pumping and pressure-control products; and Power and Industrial, which manufactures valves, pumps and turbines.BofA retained its 'buy' rating for the stock in a research report this morning but raised its target price from 2,300p to 2,500p, following a visit to Weir SPM, the unit responsible for well service pumps and high-pressure control products which accounts for 23% of profits.Barring a substantial fall in the oil price, the broker believes that SPM's markets are at or around trough, but a number of internal measures should drive improvement and differentiation, "including further incremental cost savings, service network and bundling and new products".BofA said that despite a strong performance in 2013 so far (up 21% year to date), Weir is still trading at a discount to the sector with a price-to-earnings ratio of 14.3."The company remains well placed and given the measures being taken at SPM, we believe Weir can trade back to its 10-15% historical premium versus the sector - which is reflected in our higher 2,500p price objective."Meanwhile, Weir announced on Monday that Norges Bank, one of its largest shareholders, has raised its stake in the firm to over 3.0% after buying up shares.BC