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Vesusius gets a boost as RBC Capital ups its rating to ‘Top Pick’ after recent share price weakness

Published: 12:07 10 Jun 2019 BST

Mount Vesuvius
RBC reiterated a 700p price target on the FTSE 250-listed group, pointing out that the stock has fallen by 20% over three months

RBC Capital gave a boost to Vesusius PLC (LON:VSV) shares on Monday, upgrading its rating for the metal flow engineering group to ‘Top Pick’ from ‘outperform’ following recent share price weakness.

The Canadian bank reiterated a 700p price target on the FTSE 250-listed group, pointing out that the 20% decline in the stock over three months is the weakest in its coverage.

READ: Vesuvius lifted by rising steel demand

In a note to clients, RBC’s analysts said they estimate that Vesuvius’ shares are pricing in around a 20% cut to earnings per share (EPS), however, they see EPS upside supported by self-help.

The analysts added: “Our 2020E EPS is c5% above consensus and still does not give full credit for the management margin target of 12.5% (vs a pro forma past peak of c16% on our analysis).”

As a result of the upgrade, they said they had Vesuvius to RBC’s European Equity Small & Mid Cap Best Ideas list.

In late morning trade on Monday, Vesuvius shares were nearly 1% higher at 513p.

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