Panmure Liberum has upgraded Spirax Group PLC (LSE:SPX) to 'buy' from 'hold', arguing that Tuesday's sharp fall in the shares has created an entry point into a company whose earnings momentum is finally turning.
Oliver Swift raised his target price to 8,150p from 7,550p, against a closing price of 7,225p, implying upside of about 13%.
Spirax shares closed down 5.6% on Tuesday despite what the analyst called a relatively robust set of interim results, a fall that followed a strong run in the stock.
Adjusted operating profit came in 2% ahead of the broker's expectations at £171.1 million, helped by favourable currency movements, on revenue up 5% to £864 million.
Full-year guidance was reiterated, and Swift made only minor estimate changes, lifting his 2026 earnings per share forecast 1.6% purely on the removal of a currency headwind.
The standout performers were Watson-Marlow, the peristaltic pump business serving biopharmaceutical customers, where profit rose 15%, and electric thermal solutions, up 26% on demand from semiconductor customers.
Steam thermal solutions, the largest division, was the weak spot, with profit down 5% and margin 140 basis points lower on shipment phasing and front-loaded investment in sales staff.
That division is the sticking point for the second half, needing 8% profit growth against a 5% decline in the first, though Swift pointed to a strong order book now unwinding and projects deferred into the period.
The macro backdrop remains unhelpful, with global industrial production growth of 1.8% in the first half and German output down 1.7%.
Net debt excluding leases rose to £618 million from £565 million at the year end on a planned inventory build ahead of possible supply chain disruption from the Middle East conflict.
Swift said the shares now traded on 20.4 times 2027 earnings, historically cheap for the group, with scope for upgrades if industrial production picks up.
The shares rose 20p to 7,245p.
