Industrials await H2 cheer
STOXX 600 up 0.3%
Middle East tensions in focus
Wall St futures edge up
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INDUSTRIALS AWAIT H2 CHEER
A rather unexciting Q1 reporting season is shaping up for European industrial players, RBC Capital markets analysts say, as they await an improvement in the second half of the year.
They forecast average organic sales growth of 2% in the first quarter, compared to 1% in the prior quarter and their full-year expectations of 3.5%.
"In share price terms, we think the old adage of 'sell in May' has some validity in the industrials sector," they say in a note.
Still, sector medium-term fundamentals remain attractive, supported by drivers such as energy efficiency, automation, electrification and near-shoring, as well as cyclical attractions, they add. Moving into the second half of the year they also expect an uptick in more general industrial
demand.
However, with valuations having moved above the bank's 10-year average in the group, the analysts stick to their selective approach and focus on names they see as offering attractive value versus underlying business quality.
They highlight Siemens SIEGn.DE, Metso METSO.HE, SKF SKFb.ST, IMI IMI.L, Weir Group WEIR.L and TT Electronics TTG.L as attractive.
(Anna Pruchnicka)
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