Broker snap: Mining revival a boon for Weir Group

15th Oct 2009 11:38

Broker Panmure Gordon has been casting its eye over some positive developments in the global mining sector and concludes that Weir Group, which supplies engineering services to the mining and oil & gas industries, ought to be one of the beneficiaries.Among the positive signs have been yesterday's announcement by mining giant Rio Tinto, whose quarterly metal production figures suggest the downturn may be coming to an end. 'It appears that the mining industry has moved ahead now with increased optimism,' said Panmure.Panmure thinks the mining bounce is being powered by a general economic revival, but also by weakness in the dollar, which has sent investors looking for safety in the commodities sector. The broker is aware of expectations of a revenue dip for Weir in 2010, but chooses to look ahead to 2011, since many orders made in 2010 will appear in the following year's figures.The target price is increased from 690p to 880p and the recommendation is raised from 'hold' to 'buy'.