SHARES in Weir Group, which makes pumps and valves for the mining and oil services sectors, climbed by more than 4% at one point yesterday after the City-based Daniel Stewart brokerage said in a research note that the group's share price now better reflects the sector's weakening outlook.
Daniel Stewart analysts said the engineering sector took a further hit recently following figures from Baker Hughes, the US oil services company, which showed the biggest week-on-week fall in the number of active oil drilling rigs in the United States since the oil industry crisis in the mid-1980s.
However, the broker said Glasgow-based Weir's shares, which have fallen about 60% since the beginning of September 2008, currently trade on a 2009 price earnings ratio of 7.3 times, which it believes is low enough to cope with the danger of further downgrades.
Daniel Stewart repeated its "hold" rating on the stock.
Weir shares closed 12p stronger at 373.25p - a gain of 3.3% in yesterday's London dealing. The company has a market value of more than £780m.
The shares climbed by more than 4% just after the Daniel Stewart research note came out.
Analysts at other brokerages said Weir was also given a boost by rising oil company stocks.
In a management statement for the 13 weeks ending September 26, 2008 that was issued by Weir in October, the company said it was on track to make operating profits of around £170m.
"During the third quarter, the group has continued to perform strongly, with good growth in input, revenue and profit, on a constant currency basis, reflecting ongoing demand for our products across the mining, oil and gas and power sectors, and the impact of recent acquisitions," the statement said.
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