Broker snap: Investec optimistic about H2 delivery at Weir

30th Jul 2013 10:49

Investec has upgraded its rating for Weir Group from 'hold' to' buy' in the hope that the engineering firm will hit full-year targets despite missing forecasts in the first half.The company, which works the key sectors of minerals, oil & gas and energy, reported group revenues of £1,198m in the first half, down 5.0% year-on-year and below Investec's £1,254.7m estimate.Adjusted pre-tax profit of £193m (-14%) and earnings per share of 66.4p (-13%) missed the £208m and 70.1p forecasts, respectively. Margins also declined more than anticipated.Nevertheless, Weir said it remains on track to meet full-year expectations and continues to expect low single-digit revenue growth and stable margins. "The bears will latch onto various data points (especially around Minerals OE order intake/revenues/delays) but the debate remains finely balanced in our view," Investec said."We believe that the rational given for the larger 2H skew being achieved is credible, however, the focus will quickly turn to FY14. In the longer term we believe the group remains well positioned in attractive end markets with an increasing installed base."The broker has maintained its 2,340p target price for the stock.The share price was up 3.51% at 2,150p by 10:49 on Tuesday.BC