Deutsche Bank downgrades Weir to 'hold'

Deutsche Bank has downgraded industrial engineer Weir Group to ‘hold’ from ‘buy’.

“Six months ago we said that a bottoming in the US rig count should drive Weir shares higher; with that bottom now seemingly imminent, the question is: what's next?” said DB.

Deutsche said that while the rig count thesis has played out, a key negative has been the outlook for margins, largely driven by pricing, and a major reason that consensus earnings per share forecasts are down around 30% year-to-date.

“We see H2 2015 as the low point from margins, with cost savings kicking in from H2 and the potential for price ratchets to kick in as oil prices rise,” noted DB.

It added that key upside risks include a sharper-than-expected upturn in US shale activity, while downside risks include a further prolonged decline in the oil price, and any slowing global growth impacting the outlook.

DB raised its price target on the stock to 2,000p from 1,900p.