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Weir Group upgraded as mining sector sees a solid and improving market

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Morgan Stanley has upgraded Weir Group Plc (LON:WEIR) to ‘overweight’ as it expects a “solid” market amidst improving metal prices and higher industry spending.

Moreover, analyst Robert Davies, in a note, pointed to a recent pullback in the engineering and services share as “an attractive entry point”.

Weir’s recommendation moves to ‘overweight’ from ‘equal weight’, with a price target of 2,200p (current price: 2,006p).

It comes after Weir’s oil and gas exit which leaves the company as a pure-play on the mining services sector, at a time when the industry is increasingly healthy.

“Since the announced O&G sale the shares have been strong outperformers: +48% vs SXNP +12% and FTSE 350 Engineering +16%,” Davies noted.

“It’s clear the market has rewarded this strategic move. However, we think the recent 10% pullback provides an attractive entry point and allows us to bolster our exposure.”

Davies highlighted the attractive setup in the sector including strong year-on-year capex growth, with 23% more expected to be spent in 2021, meanwhile, mining companies are expected to see improved financial strength.

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