Rotork shares plunge as Investec says 'sell'

Shares in Rotork plunged 15% after Investec downgraded the stock to a 'sell' after the company on Thursday warned its full year profits would be lower than expected.

The broker cut its target share price to 170p from 210p.

Investec said Rotork's purchase of specialised valve maker Bifold added £750m to its addressable markets but increased the company's exposure to the troubled oil and gas sector.

“We understand the attractions of its complementary offering, which should offer useful synergies in the longer term, but we believe the timing is brave, in markets that are softening,” Investec said in a note.

“We have aimed towards the low end of the indicated ranges for revenue and profit and we expect 2016 to be tough as well. In aggregate, this undermines the immediate value of the shares, notwithstanding Rotork’s status as a strong and well-managed business.”

Investec said Rotork's group’s ‘activity indices’ provided some comfort but “clearly the conversion to firm profit-generating orders is slipping”.

“News from this sector shows that the situation continues to deteriorate. There are likely to be more attractive opportunities, in the next few months, for investors with a longer-term ambition of investing in Rotork.”

Rotork shares were 29.8p down to 186.2p at 1107 BST.