LONDON (ShareCast) - (ShareCast News) - Investec took a look at the UK industrials space, upgrading IMI to 'buy' from 'hold', while cutting Spectris to 'hold' from 'buy' and both Vesuvius and Weir to 'sell' from 'hold'.
Investec said that for most companies, trading in September will have been weak, not terrible, just weaker than consensus expectations.

"This will be confirmed by the upcoming trading update season, but has been previewed by the slew of broad-based profit warnings globally and recent conversations we've had."

On IMI, it said investors still generally buy into chief executive Mark Selway's s strategy and plans even if the doubling of profit target to 2018 looks a challenge.

"We view IMI as being at the better quality end of the UK industrials universe and the operational actions being delivered will only enhance this medium-term. While short-term earnings momentum is negative (although probably not as bad as currently assumed) we see cash generation, the balance sheet and dividend yield as attractive and the valuation as undemanding."

As far as Vesuvius is concerned, the brokerage said management has continued to improve the operational performance in recent years, but multiple end market headwinds will overshadow these efforts for the time being.

"We downgrade our EPS expectations for Vesuvius more than for almost any other company we cover as trading in both divisions continues to deteriorate. We are well below consensus and comfortable being so."

Finally, it said Weir looks vulnerable to profit revisions greater than consensus expectations reflect.

"The impact of copper and gold will be felt in terms of lower volumes and pricing, particularly in FY16E, we believe."

Investec said this outturn is not factored into current guidance or consensus estimates.

It added that the share share price has fallen significantly since the beginning of August and therefore some of the news is probably priced in, but not all.

At 1030 BST, IMI was down 0.2% at 1,048p, Vesuvius shares were down 3.3% at 349p and Weir Group was 2.6% lower at 1,366p.

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