Jefferies recently reiterated its Buy rating on WEIR Group Plc (WEIR:LN) (OTC: WEGRY) with a price target of £25.70. The firm's analysis highlighted WEIR's successful transition into a pure-play mining technology company, showcasing improvements in market position, product offerings, and management performance.
Over the past few years, WEIR has evolved significantly, with robust through-the-cycle EBITA margins and a solid business model. The firm also recognized the group's strong market positions and clear strategic direction, leading to positive outcomes.
WEIR's focus on aftermarket sales, which make up around 75% of its revenue, is seen as a key advantage, especially in the current mining cycle. Jefferies anticipates continued strength in aftermarket business and an increase in original equipment (OE) sales to expand the installed base and drive future high-margin aftermarket sales.
Valuation of WEIR shares indicates they are trading at modest multiples, with a forward Price to Earnings Ratio (FY25F PER) of 16.7 times and an Enterprise Value to EBITA (EV/EBITA) of 11.9 times. The Buy rating and £25.70 price target reflect confidence in WEIR's potential for further EBITA margin improvement and cash generation.
Recent financial results for Weir Group Plc show a strong performance, with a year-over-year margin increase of 150 basis points in the first half of 2024. Despite a slight decline in organic sales, the stability of Weir's Infrastructure businesses stood out, demonstrating solid delivery compared to peers. For the full year 2024, Weir Group has raised its margin guidance to around 18%.
Goldman Sachs has maintained its Buy rating on Weir Group, setting a price target of £23.40. The firm sees a viable path for the company to achieve its 20% margin goal by fiscal year 2026, supported by its aftermarket segment leadership and cost-saving initiatives.
Berenberg has also reinstated a Buy rating on Weir Group, with a £26.00 price target, citing the company's focused strategy, aftermarket services reliance, and alignment with long-term growth trends as reasons for optimism.
InvestingPro Insights
InvestingPro data supports the positive outlook on WEIR Group Plc (OTC: WEGRY), emphasizing the company's stability and potential. WEIR's commitment to increasing dividends and low price volatility make it an appealing option for investors seeking steady performance.
With a market capitalization of $7.23 billion and a price-to-earnings (P/E) ratio of 24.89, WEGRY's earnings potential is evident. However, a 4.97% decline in revenue over the past year raises considerations for its growth trajectory.
InvestingPro offers in-depth analysis on WEIR Group's performance, including debt levels, profitability forecasts, and liquidity metrics. Additional tips and insights are available for investors looking to delve deeper into WEGRY's investment potential.
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