Spirax-Sarco Engineering PLC’s (LON:SPX) shares rose on Thursday after the firm left its full-year expectations unchanged despite a challenging economic backdrop, prompting Peel Hunt to upgrade its rating for the stock.
In a trading update for the four-month period ended 31 October 2019, the manufacturer of steam management systems and peristaltic pumps said it has confidence that the group will make further progress in 2019, supported by its investment programmes.
READ: Spirax-Sarco outstrips industrial production in first half but global market is slowing down
The FTSE 100-listed firm said the fourth quarter will be at the bottom of the downward trend in the global industrial production and expects a pick up in 2020.
In the four months period, Spirax said group sales, excluding acquisitions and disposals, had a lower growth rate compared to the previous period, although it outperformed the sector’s 1% growth.
Sales growth from its steam specialities business was weaker, as expected, while the Watson-Marlow Fluid Technology Group had a better performance than the first six months of the year.
The firm said its business remains highly cash generative and it maintains a strong balance sheet, with net borrowings, as at 31 October 2019, at £315.4mln.
In a note to clients, analysts a City broker Peel Hunt called the update "reassuring" and upgraded its rating for Spirax to 'add' from ‘hold’ with an unchanged target price of 8.450p to recent weakness in the share price, with the analysts noting that the business is able to progress despite tough end markets.
Spirax shares were 0.9% higher at 8,285p on Wednesday morning.