Weir Group PLC's (LSE:WEIR) first-quarter 2026 trading update triggered a 15% fall in the shares this week, but analysts at UBS and Panmure Liberum said that while softer organic orders weighed, the shares now look much too cheap.
Weir's quarterly orders showed a 4% increase overall, with original equipment (OE) orders increasing by 1% and aftermarket (AM) orders growing by 4%.
Weaker organic growth was due to project timing and short-term disruptions, partially offset by acquisitions contributing 7%.
Panmure Gordon analyst Alex O'Hanlon acknowledged that the softer organic orders could concern investors, but felt the company's strong order book and visibility for the year ahead offer a solid foundation.
O'Hanlon upgraded to a 'buy' rating from 'hold', with an unchanged share price target of 3,490p, citing Weir's exposure to mining capital expenditure and solid demand for aftermarket services.
UBS analyst Ed Hussey expressed caution, with the orders update prompting a reduction in growth forecasts and the price target 15% to 3,400p.
However, he maintained a 'buy' rating, saying the share "looks far too cheap at these levels", highlighting Weir's strong margins, robust cash flow, and strategic position within the mining sector as undervalued despite the weaker-than-expected order growth.
While growth concerns persist, Hussey said he believes the market overreacted to the short-term downturn.
He said with 2023-2025 average organic order growth of only 3% there "is a legitimate concern" that Weir's through-cycle growth target of mid-to-high single-digit organic growth is "overambitious, particularly given the lack of growth support coming from a growing installed base".
He added that strong growth rates observed some markets are "a cause for concern" as they could imply market share losses, but he said Weir’s valuation presented a buying opportunity for those focused on long-term fundamentals, given a 6% free cash flow yield and a low valuation relative to history and peers.
Also highlighted were 20%-and-growing margins, strong cash conversion, 34% exposure to copper and gold, 10% exposure to coal and oil sands, and 9% exposure to infrastructure, trading "only on 14x EV/EBIT".