Senior PLC upgraded to ‘overweight’ by Barclays as some short-term uncertainties

() was upgraded to ‘overweight’ from ‘equal weight’ by Barclays after the past months have seen a significant reduction in uncertainties for the near-term outlook.

Analysts noted that there are still considerable commercial aerospace headwinds, but the risk that major clients may have to revise the 2021 delivery schedule are in the past.

Moreover, concerns over the balance sheet have not materialised and the engineer is expected to return to earnings growth and positive free cash flow from 2023.

The investment bank said it can now adopt a “more constructive” stance on the aerospace supplier’s share price outlook, so they raised the target price to 139p from 77p.

“In prior downturns, typically what follows is the strongest period of outperformance in aero as stocks track anticipated earnings recovery,” analysts concluded.

In last week’s final results, Senior posted a 33% slide in revenue to £733mln and slumped to a £191mln loss before tax from a £28mln profit in 2019.

It said that production volumes for civil aerospace will be lower in 2021 than 2020 based on the production rates that the aircraft and engine OEMs have announced, while the defence markets are anticipated to remain stable.

Instead, heavy-duty truck and passenger vehicle markets are expected to continue to recover in 2021 but recovery in the oil & gas sector is unlikely before 2022.

Shares rose 1% to 117.17p on Thursday morning.