Risk over the medium term for industrial engineering outfit Weir's share price lies to the upside, analysts at Investec wrote to clients on Monday morning. However, the company's share price is now almost at its target price, hence their decision to move to a 'hold' stance from 'buy.'

In a more detailed manner, the analysts explain that they now expect the company's sales to be 6% lower than previously forecast, at £2,578m, on lower Minerals growth rates and underlying reductions in Oil & Gas, offset by the contribution from Mathena.

However, that will be mitigated by greater than expected EBITA margins forecasts in all divisions. As well, a lower tax rate at the earnings per share (EPS) level will reduce the impact to a 3% fall in EPS to 150.9p.

As well, the recent re-rating of the global peer group to 15.7 times means that, despite all of the above, the firm's price target now rises to 2,370p from 2,250p before.

Lastly, the broker warns that it sees technical pressures (short squeeze) in the short-term causing the shares to remain volatile.

AB

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