Investing.com — Nuclear and gas turbine demand is becoming a structural growth driver for UK capital goods companies, with emerging as the top pick as hyperscaler power needs, energy security concerns and decarbonisation push a multi-year investment cycle, according to analysts at Barclays in a note dated Monday
The brokerage raised its IMI price target to 3,230p from 2,810p, maintained its “overweight” rating on at 820p, and downgraded to “equal weight” from “overweight,” cutting its target to 355p from 375p.
IMI carries roughly 12% combined group revenue exposure to industrial gas turbines and nuclear, against Rotork’s approximately 3%. Within its Process Automation division, IGT accounts for 14% of orders and nuclear 13%, with nuclear aftermarket comprising 74% of nuclear orders and IGT aftermarket at 79%.
Barclays forecasts IMI’s IGT orders will be 48% higher in FY28 versus FY25, and nuclear orders 38% higher over the same period.
Group EPS is forecast to compound at a 10% CAGR from 140.7p in FY26 to 170.5p in FY28, yet IMI trades at an 18% discount to the sector on FY26 price-to-earnings of 19.6x.
Bodycote, trading at 13.9x FY26 price-to-earnings, among the cheapest in Barclays’ UK and European coverage universe, offers leveraged exposure to gas turbines through Hot Isostatic Pressing and thermal processing of blades and vanes.
Industrial gas turbines and aerospace and defence were the only two end markets to grow for Bodycote in FY25, with IGT up 6% year-on-year.
Barclays forecasts IGT sales more than doubling by FY28 versus FY25, with group EPS CAGR of 12% from 48.8p in FY26 to 61.6p in FY28.
GE Vernova and Siemens Energy account for approximately 80% of Bodycote’s IGT revenues.
Rotork’s largest division, oil and gas, represents approximately 45% of group revenue and is forecast to grow just 0%-3% annually through FY28.
Gas turbine exposure is geographically skewed toward Europe and Asia rather than the faster-growing U.S. market, where Emerson is the dominant player.
Nuclear, re-entered at the start of FY25, will remain negligible, approximately 2% of group revenue by FY28 on Barclays’ estimates. Group EPS CAGR is forecast at 7% FY26-FY28, from 17.3p to 19.6p.
The International Atomic Energy Agency forecasts global nuclear installed capacity could reach between 561 GW and 992 GW by 2050, up from 379 GW today.
OEM gas turbine order books are effectively sold out to 2028-plus, with global GT orders in Q4 2025 reaching approximately 34 GW, up 134% year-on-year.