Weir's valuation "high enough" after cautious update, says Numis

11th Jun 2015 09:19

Shares in Weir Group were extending losses on Thursday morning as analysts reacted to a cautious trading update from the engineering outfit the previous day, with recent weakness in the US oil and gas market worse than expected.Broker Beaufort Securities lowered its recommendation on the stock to 'hold', while Jefferies stayed at 'hold' and JPMorgan Cazenove maintained an 'underweight' stance.Meanwhile, Numis Securities reiterated its 'hold' rating and reduced its profit forecasts, saying that the stock's valuation is up with events."The oil and gas weakness in North America is having a deeper and more protracted impact than previously anticipated, hence the reduction in expectations of 5%," said Numis analyst David Larkam. He now predicts a pre-tax profit of £270m this year, down from his initial estimate of £285m."When recovery comes the shares will no doubt start to look attractive again," Larkam said.However, he said that the current rating and lack of clarity as to the length of the downturn means the stock is "high enough for now".The shares currently trade at 20 times estimated earnings for 2015.The stock was down 0.7% at 1,900p by 09:32.