On Sunday, Jefferies reiterated its buy rating on WEIR Group Plc (WEIR:LN) (OTC: WEGRY) with a target price of £25.70. The firm’s analysis highlighted WEIR’s successful transformation into a mining technology company, noting improvements in market position, product offerings and management performance.
The company acknowledged WEIR’s progress over the past few years, citing the company’s strong EBITDA margins over the cycle and robust business model. The analysis also acknowledged the group’s strong market position and clarity of strategic direction, which were key to achieving positive results.
WEIR’s focus on the aftermarket, which accounts for approximately 75% of sales, has been identified as a significant advantage, especially given the current state of the mining cycle. The company said it looks forward to continued strength in the aftermarket business and improved original equipment (OE) sales to expand the installed base and higher-margin aftermarket sales in the future.
The firm’s valuation of WEIR shares suggests that it trades at modest multiples, with a forward price-to-earnings (FY25F PER) of 16.7x and an enterprise value-to-EBITDA (EV/EBITA) of 11.9x. The reiteration of the Buy rating and £25.70 price target reflect confidence in WEIR’s potential for further improvement in EBITDA margins and cash generation.
In other recent news, Weir Group (OTC:) Plc maintained strong financial performance, reporting first-half 2024 results. These results revealed a 150bps year-on-year margin increase, offsetting a 3% decline in organic sales. Despite orders and sales falling slightly short of consensus, Weir’s infrastructure business was highlighted as stable, demonstrating strong delivery relative to peers. For the full year 2024, Weir Group improved its margin guidance to around 18%, adjusting for a softer sales outlook.
Goldman Sachs maintained its buy rating on Weir Group, with a target price of £23.40, following the results. The firm’s analysis points to a viable path for the company to reach its 20% margin target by FY26, supported by Weir’s leading position in the aftermarket segment and the implementation of cost-cutting measures.
Additionally, Berenberg has reaffirmed a Buy rating on Weir Group, with a target price of £26.00. The firm cites several factors contributing to this positive outlook, including Weir Group’s focused strategy, its reliance on aftermarket services, and its alignment with long-term structural growth trends. These latest developments underscore analysts’ confidence in Weir Group’s financial trajectory.
InvestingPro Insights
Recent data from InvestingPro confirms the stability and potential of WEIR Group Plc (OTC: WEGRY ), which is in line with Jefferies’ optimistic outlook. The company’s commitment to growing its dividend, having increased it for four consecutive years, is a testament to its financial flexibility and shareholder-friendly approach. Furthermore, the low volatility of the stock suggests that it could be a suitable option for investors seeking consistent performance.
Financially, WEGRY has a market cap of $7.23 billion, and the stock is trading at a price-to-earnings (P/E) ratio of 24.89, reflecting its earnings potential based on the trailing twelve months through Q2 2024. However, the company’s revenue has seen a decline of 4.97% over the same period, which may be worth considering in the context of its overall growth trajectory.
For investors looking for a deeper look into WEIR Group’s performance and prospects, InvestingPro offers additional tips and metrics, including a detailed analysis of the company’s debt levels, profitability outlook, and liquidity. There are 5 more InvestingPro tips available that can provide valuable insights for those considering investing in WEGRY.
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