Numis upbeat about Weir's prospects, but shares at "fair value"

31st Jul 2014 12:49

Numis Securities has kept an upbeat view of Weir after the engineering group's in-line interim results, but reiterated its 'hold' rating on the stock, saying the current valuation is full."We continue to view Weir as a high quality business with leading market positions, excellent margins and strong cash generation but believe current valuation levels are up with events," the broker said.Since the start of 2014 the shares have risen by around a quarter and have "re-rated to fair value", Numis said.The broker said that the stock trades at 18.3 times earnings estimates this year, falling to 16.8 times in 2015."Its acquisition cushion, aftermarket profile and clear long-term growth opportunities should provide valuation support at these levels. Additionally, the balance sheet still provides scope for yet further acquisitions."Weir's first-half revenues were down 5% year-on-year at £1.14bn, but Numis said this was as expected with results affect by ongoing weakness in the minerals division and currency headwinds.However, order input was up an "impressive" 10% at £1.24bn which the broker said should support expectations for the rest of 2014.Numis has maintained its 2,700p target price for the stock, which was down 4% at 2,560p by 12:49 on Thursday.BC