Weir Group hit by RBC downgrade, risk-reward now balanced

23rd Mar 2015 10:38

Shares in Weir Group were being weighed down on Monday by a ratings cut at RBC Capital Markets, which said that the risk-reward for new investors is now balanced.The broker lowered its stance on the engineering outfit from 'top pick' to 'sector perform' and slashed its target price from 2,150p to 1,850p.RBC said given Weir is a highly cyclical business, the stock should respond quickly to signs of oil and gas markets normalising. If this happens the shares could rise as high as 2,500p.However, it said the shares appear to be pricing-in a 'V'-shaped recovery in the US horizontal rig count in the second half on the hope that orders will pick up."The shares might be impacted by another outcome, such as an 'L'-shaped stabilisation," the broker said.The stock was 2.9% lower at 1,788p by 11:23.