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Numis downgrades Weir citing little short-term potential following rally

Published: 10:39 20 Apr 2018 BST

Mining machinery
Numis estimated Weir assuming around £280mln of debt from the ESCO purchase

Numis has knocked its rating for Weir Group PLC (LON:WEIR) down to ‘Hold’ from ‘Add’ as it saw little short term potential in its shares following a recent rally in its share price.

In a note to clients, the broker said the FTSE 250 industrial company’s acquisition of US mining equipment business ESCO as well as its plan to sell its Flow Control division announced on April 19 showed multiple positives in the long term, however there wasn’t much to drive additional short term gains.

READ: Weir to cut ties with industrial pumps as it focuses on oil and mining

The acquisition of ESCO is being funded by a placing through a bookbuild to generate between £350-£380mln for the cash component.

Numis said it estimated Weir assuming around £280mln of debt as a result of the purchase.

The broker was positive on the company’s disposal of its Flow Control division, saying it would “remove a management distraction” and that it “has been the poor relation within the group for many years”.

Shares in Weir were down 1.3% at 2,220p in mid-morning trading Friday.

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