Weir Group earnings upgraded by Credit Suisse on impending bottom for US rig count

29th May 2015 13:12

Shares in engineer Weir Group bubbled higher after a bullish note from Credit Suisse heralded "light at the end of the tunnel", with its target price ratcheted to 2,205p from 1,915p and an 'outperform' rating reiterated.The Swiss bank hoisted its estimates for 2016 and 2017 earnings per share by 9% and 8% on the improving outlook for Weir's oil and gas business underpinned by an "impending bottom" to the US rig count, its own year-end forecast for the WTI oil price of $67 and growing global oil demand growth.As well as seeing scope for positive surprises from the recovery at Weir O&G business in 2016, the minerals business is also seen as "a better cash return business than some may credit"."While mining equipment is an end market currently unfavoured by investors Weir Minerals performance is among best in class."Finally, future potential upside could also come from the Power & Industrial (P&I) division, which is expected to either scale up or be divested at some time in the future."With valuations for in demand process assets high, divestment may be a better option. Disposing P&I at recent transaction multiples would mean Weir is virtually debt free in 2016 and opening up the balance sheet to M&A."