LONDON (ShareCast) - Following the recent underperformance by shares of Vesuvius, analysts at Investec have decided to move to a 'buy' recommendation on the stock.

In their opinion, self-help measures including efficiency improvements and mix enhancement constitute a de-risking of the investment case.

Together with its strong market position, the broker expects the above to result in “steady progress, supporting debt reduction and a progressive dividend.”

Although growth may be patchy in the short term, the company is well placed for a recovery. The company will also benefit from the gradual shift in the bias of global steel production – driven by China - towards flat products for consumer durables, the broker explains.

Unfortunately, and like its UK industrial peers, sterling´s broad strength will virtually eliminate this year´s progress in reported operating profits, yet underlying growth and margin improvement is forecast.

The 485p target price has been kept, reflecting the aforementioned currency headwind and a 10% discount to the average 2013-2015 earnings per share for the extended Industrial Engineering sector.

AB

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