Shares in Spirax Group PLC (LSE:SPX) rose 3% to 7,220p after UBS turned bullish on the industrial engineer, lifting its rating from 'neutral' to 'buy' and setting a punchy new price target of 10,500p, almost 50% higher than today’s level.
The Swiss bank change of heart follows what it calls a “deep-dive” into the group’s key divisions, concluding that all are on track to deliver better growth than the market expects.
Its forecast for 2026 adjusted operating profit is 8% above consensus, with all three units — Steam Thermal Solutions (STS), Electric Thermal Solutions (ETS) and Watson-Marlow (W-M), seen contributing to the upturn.
Concerns about China, long a drag on the shares, are “overstated”, UBS argues.
Maintenance and repair work there is showing double-digit growth, which could return the region to expansion in the second half of next year. That should help STS deliver organic sales growth of about 5.5% in 2026, ahead of the market’s 4.1% estimate.
ETS, meanwhile, is firing on all cylinders. Demand from semiconductors, medium-voltage equipment and data centres is driving high single-digit growth, with margins forecast to climb towards 20% by 2028 as efficiency and pricing gains take hold.
The biopharma arm, Watson-Marlow, is also back on the mend. Orders rose by double digits in the first half, and UBS expects this to continue into the second.
A global wave of biopharma investment, roughly $400 billion of announced projects, gives further optionality for growth.
Spirax now trades at a discount of around 17% to its 10-year average valuation.
UBS sees that as “unjustified” for a company with sector-leading returns and a solid recovery story across its divisions. Investors appear to agree: after a long spell in the doldrums, the steam looks to be building again.