JPMorgan downgrades Rotork to 'neutral'
JPMorgan Cazenove downgraded its stance on industrial flow control equipment maker Rotork on Monday to ‘neutral’ from ‘overweight’ as it argued the company faces a still challenged end-market backdrop in 2021, likely limiting near-term upside to consensus.
The bank also noted the shares are close to its unchanged price target of 310p and said it was waiting for another opportunity to buy "when the relative set-up is more attractive".
"Our long-term positive view on the stock has been based on Rotork being a quality asset with an under-appreciated operational improvement story and a management team likely to execute ahead of plan," JPM said.
"Our conviction on this being the reality is unchanged and, if anything, confidence is increased by the evidence over the past three years. What we see has changed is the relative attractiveness of peers and end markets looking into 2021."
The bank said its prefers stocks with more short-cycle exposure to drive upside to consensus, where end-markets are recovering more quickly and where there is a more obvious discount to its fair value.
At 1040 GMT, the shares were down 1.5% at 297.40p.