LONDON (ShareCast) - Shares in metal flow engineering group Vesuvius dropped sharply on Wednesday after analysts at JPMorgan Cazenove lowered their stance on the stock from 'overweight' to 'neutral'.
The bank said weak steel production in the States has prompted it to cut forecasts for Vesuvius's earnings per share this year by 7% to 34.3p.

After a strong share-price performance over the past 12 months - up around 15% compared with the sector-average of under 10% - the stock is now trading in line with its reduced target price of 510p, lowered from 531p previously.

The pace of decline in US steel production has increased in recent weeks, JPMorgan said, from -4% in the January and February combined to -11% in March and -14% in April.

The bank doesn't expect a significant bounce in the near term given slowing economic growth and weakness in spending from the oil and gas and agricultural equipments industries.

However, the bank said: "While the recent weakness in US steel production has prompted a reduction in our forecasts, we still expect self-help to continue to drive improvements in productivity over the next couple of years."

As such, the downgrade to the 2016 EPS estimate is a more modest 4% to 38.4p.

The stock was 5.5% lower at 473p by 09:55.

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