Vesuvius Plc (LON:VSVS) shares fell on Wednesday after JPMorgan Cazenove downgraded its rating for the engineered ceramics company to 'neutral' from 'outperform' on valuation grounds in its 'Generalist Mid-Cap Year Ahead' review.
The US bank did raise its target price for the FTSE 250-listed firm to 591p from 575p but, with the stock currently trading at 524p, down 2.7% on Monday's close, its analysts tempered their recommendation following a strong recovery in the share price.
In the note to clients, the JPMorgan analysts said: "Management has a strong cost savings track record, though we expect the emphasis to shift towards growth and M&A from here. We see more upside elsewhere, with the group's FY2 P/E now being 30% above its average since 2015."
In its last update, back in November, Vesuvius said that demand in its end-markets had improved, albeit slowly, for both its Steel and Foundry divisions during Q3 2020, with the trends having continued into Q4.
On a constant currency basis, the group said its sales in Q3 were up 7.0% quarter on quarter and, although down 14.3% year on year, that was an improvement on the sales decline of 26.2% in Q2 compared to Q2 2019. The improvement in trading continued into October 2020 with sales down a more modest 7.5% compared to October 2019, it added.
Vesuvius concluded in November that they expected group trading profit (EBITA) for 2020 to be broadly in-line with current consensus market expectations.