Last checked at 
(Sharecast News) - Jefferies has adjusted its ratings on stocks across in a review of the UK-listed capital goods sector, which included upgrades of Elementis, XP Power and Spirax-Sarco Engineering.
"2024 will likely be another mixed year for the UK industrials given a soft macro backdrop in 1Q24 and geopolitical risks. That said, there is improvement potential, and attractive end markets, equity stories and modest valuations, which appeal," the broker said in a research note on Wednesday.
Jefferies said it continues to prefer companies with "self-help stories", as well as strong balance sheets, and is more attracted to cyclical stocks "over expensive quality".
Based on its estimates, the UK industrial sector trades at 14.7 times 2024 earnings, falling to 12.6 times on next year's forecasts, though there is a significant disparity between cyclical and quality names, the broker said.
Jefferies made three upgrades and three downgrades on Wednesday: the broker raised Elementis and XP Power to 'buy' from 'hold' due to their "EBITDA margin potential and cyclical recovery upside, respectively", and lifted Spirax-Sarco to 'hold' from 'underperform'; on the downside it has cut its stance on both AB Dynamics and Victrex to 'underperform' from 'hold', and lowered Morgan Advanced Materials to 'hold' from 'buy'.
