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JPMorgan downgrades Weir, cites challenges in oil & gas

Wed 18 September 2019 08:43 | A A A

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(Sharecast News) - JPMorgan Cazenove downgraded its rating on shares of Weir Group to 'neutral' from 'overweight' on Wednesday, cutting the price target to 1,500p from 1,650p as it said oil & gas challenges were set to persist as it reviewed its investment case after recent share price strength.

The bank said that expanding its previous work on oil & gas outlines a more challenging backdrop and an elevated consensus.

JPM said the minerals business remains a quality asset. "However the challenges in oil & gas, not yet reflected in consensus, and the bounce in the share price leave the risk/reward more balanced and we downgrade to neutral," it said.

It said Weir Minerals is a top-tier asset in mining equipment with a market-leading position and resilient, aftermarket-driven earnings profile. In the near term, its view on the outlook for the mining equipment space remains positive, especially for later-cycle businesses including Weir's.

As afar oil & gas is concerned, however, JPM said all the data points to a fundamentally challenged market, one likely to see only limited support from a short-term spike in the oil price.

At 0945 BST, the shares were down 2.3% at 1,523.06p.

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