SHARES in Weir group rose 4% after a brokerage said the engineering group's oil and gas division would benefit from resurgent activity in shale areas in the USA.
Initiating coverage of Glasgow-based Weir Group with a buy rating, Redburn Partners said there is scope for material increase in the company's shares.
It believes the company's US oil and gas business will achieve strong growth in spite of concerns in some quarters that activity may have peaked following a boom in the key onshore market.
Weir Group issued a profit warning in November when it noted an unexpected fall in rig count in the US in the third quarter.
Redburn analyst Stephen Swanton wrote: "There is recovery in the US fracking market and improved rig economics will see the Oil & Gas division grow sales more than 10% in 2014."
Fracking involves forcing sand water and chemicals into shale rocks under high pressure to help release hydrocarbons.
Mr Swanton said Weir would benefit from oil and gas firms replacing the pumps used in the fracking process and buying new ones.
Traders said Weir shares were boosted by news that the number of US natural gas and horizontal rigs increased last week.
Mr Swanton said Weir's mining business should be able to grow revenues even if big firms cut spending on new projects.
Weir earns much of its revenues from servicing mining pumps.
On Friday, Societe Generale reiterated its sell rating on Weir shares, saying the company's earnings would be affected by delays in mining projects and the strength of the pound.
Shares in Weir Group closed up 90p at £22.27. They have traded at near £25 in recent times.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article