Encouraging updates from engineers Bodycote (BOY) and Spirax-Sarco (SPX) injected some enthusiasm into the sector and may highlight a buying opportunity.

Spirax in particular has shed more than 20% since peaking in early June, impacted in part by a £1.20 special dividend paid in July, and now trades at £30.27.

But a 17 November 2015 trading update indicates concerns of a big slowdown in industrial markets are a little overblown.

‘As befits a company with a strong record of resilience, trading from July to October marked a slight deterioration from the first half of 2015 but nothing dramatic,’ writes Investec analyst Michael Blogg.

‘Similarly, we do not expect any dramatic change in estimates, even if there is a temptation to trim for the sake of caution.

‘Our estimates and target price are under review but we expect to maintain our neutral stane on this high quality and highly rated stock.’

Earnings per share at Spirax are expected to be flat at 139p in the year to 31 December 2015, according to Blogg’s estimates prior to the update for a price-to-earnings ratio of 21.8. Earnings in 2016 are pitched at 145p.

Bodycote, which has oil and gas-facing operations, also pleased markets with an update on the same day. Sales are down 10% year-to-date, the company says, but underlying profit should be in line with earlier guidance of between £101 million and £106 million.

‘The group has a proven track record of protecting profitability in difficult conditions while generating significant cash, which we consider an attractive combination,’ Blogg adds.

We remain keen on Bodycote at 535p and, after being neutral for a while, now see an opportunity at Spirax too.