Broker snap: Peel Hunt upgrades Weir to buy after Seaboard acquisition

24th Nov 2011 12:58

Peel Hunt has upgraded FTSE 100 industrial engineer Weir from hold to buy following yesterday's acquisition of Seaboard Holdings.Weir, which operates in the oil, gas, power and mineral markets, announced that it would pay $675m for US wellhead specialist Seaboard, a deal which Peel Hunt thinks looks "highly complementary" to products in Weir's oil and gas division. "Even though the valuation looks full, it comes with good growth and cross-selling potential", the broker said.As such, Peel Hunt raises its 2012 adjusted pre-tax profit forecasts by 6% to £446.5m, compared with the £294.7m figure reported last year. The rating upgrade comes as the shares have de-rated, but as the broker values the company at a 20% premium to the sector average, the target price is reduced from 2,100p to 2,000p.Weir was among the best performers on the Footsie on Thursday, trading 3.96% higher at 1,787p by 12:58.BC