Weir sees profit at upper end of range

By Mike Elliott

LONDON (Reuters) - Engineer Weir Group said it expected underlying full-year pretax profit to be at the upper end of market estimates, sending its shares to a record high on Monday.

The group, which makes pumps and valves for moving minerals, oil and seawater, said in a trading update its performance in the 22 weeks to May 30 had continued to benefit from generally strong market conditions, particularly the mining market.

The average of four analyst forecasts provided by Reuters Estimates for profit before tax, amortisation and exceptionals was 152.8 million pounds, up from 120.2 million in 2007, and within a range of 150.5 million to 154.7 million.

Shares in Weir, which have outperformed the engineering sector by 28 percent in the past 12 months, hit a record high of 947 pence, but by 8:52 a.m. were 1.7 percent up at 933.5p, valuing the group at around 1.96 billion pounds.

"In our view, Weir remains a rare and exciting earning momentum and re-rating story, as well as a relatively safe place to be," Landsbanki analyst Andrew Carter said in an investment note, reiterating a "buy" rating on the stock.

"Our target price of 960p assumes that the shares trade at 16 times 2009 estimated earnings (the bottom of oil services range) and is 4 percent higher than the closing 918p," he added.

The company said it was reorganising its business into three divisions -- Oil & Gas, Power & Industrial, and Minerals -- to reflect its increasing focus on those industrial sectors, a move welcomed by Landsbanki's Carter.

Numis raised its target price to 1,020 pence from 966p and upgraded its 2008 and 2009 forecasts for pretax profit by 5.5 percent, to 165 million pounds and 187.8 million respectively, as a result of the increased guidance and positive outlook.