Weir Group PLC (LSE:WEIR) shares rose 4% after it received a vote of confidence from UBS on Thursday, with analysts upgrading the engineering firm to 'buy' and lifting the price target to 2,850p, implying a potential 23% upside.
The upgrade centres on what UBS sees as untapped potential in Weir’s ongoing cost-saving programme, which could significantly boost margins in the coming years.
Weir’s Performance Excellence plan, launched in 2022, originally aimed to deliver £30 million in savings.
That target has already been revised up twice, now sitting at £80 million, but UBS reckons the final figure could be far higher.
The bank’s analysts estimate Weir could generate as much as £125 million by 2026, with the extra £45 million translating into a 1.6 percentage point uplift to profit margins.
The research also highlights that Weir’s global footprint and internal efficiencies give it more protection than peers against the threat of new tariffs and a potential downturn. Even in a tougher macro environment, UBS believes the group can still meet consensus earnings.
Trading at 15.6 times forward earnings, slightly below its long-run average, Weir’s valuation is starting to look attractive. H1 results in July are flagged as the next potential catalyst.
The shares rose 90p to 2,400p.