Broker snap: CS cuts target price for Rotork

3rd Mar 2011 11:37

Credit Suisse cuts the target price for engineering firm Rotork, saying earnings margins aren't as good as its sector peers.Following the group's 2010 results reported earlier in the week, the broker reduces its 2011 underlying pre-tax profit forecasts by 2%, but increases 2012 estimates by 1%.The second half earnings before interest, tax and amortisation (EBITA) margin of 26% was down 30 basis points (bp) sequentially, and 120bp year-on-year."While increasing divisional utilisation rates should help to offset the increase in overhead seen in 2010 and is aided by rising profitability levels at Process Controls [electric valve actuators manufacturing division] and Ralph A. Hiller [nuclear actuators manufacturer], we are at this juncture taking a more cautious stance on the Rotork EBITA margin expansion story," says analyst J Hurn.The target price is cut to 1,705p, from 1,830p, while a 'neutral' stance is maintained.