Barclays' latest note highlights a structural shift in demand that should support UK capital goods companies over multiple years, driven by rising investment into industrial gas turbines and nuclear projects. The brokerage's analysis singles out IMI as its preferred pick within the sector while updating valuations and ratings on peer names.
Price target and rating moves
Barclays increased its IMI price target to 3,230p from 2,810p. The firm kept Bodycote on an "overweight" stance with a price target of 820p, and downgraded Rotork from "overweight" to "equal weight," lowering its price target to 355p from 375p.
IMI: exposure and forecasts
IMI has roughly 12% of group revenue tied to a combined exposure to industrial gas turbines and nuclear markets. Within IMI's Process Automation division, Barclays reports that industrial gas turbines account for 14% of orders and nuclear 13% of orders. The note highlights the high aftermarket content in these streams: 74% of IMI's nuclear orders are aftermarket work and 79% of IGT-related orders are aftermarket.
Barclays projects IMI's IGT orders will be 48% higher in FY28 compared with FY25, and nuclear orders will be 38% higher over the same interval. Group earnings per share are forecast to compound at a 10% CAGR, rising from 140.7p in FY26 to 170.5p in FY28. Despite these projected earnings gains, IMI is quoted as trading at an 18% discount to the sector on a FY26 price-to-earnings multiple of 19.6x.
Bodycote: thermal processing levered to turbines
Bodycote is positioned as one of the cheaper names across Barclays' UK and European coverage, trading at a FY26 P/E of 13.9x. The firm offers leveraged exposure to gas turbine markets through processes such as Hot Isostatic Pressing and thermal processing of blades and vanes. Barclays notes that in FY25 industrial gas turbines and aerospace and defence were the only end markets to expand for Bodycote, with IGT sales up 6% year-on-year.
Barclays expects Bodycote's IGT sales to more than double by FY28 versus FY25, and forecasts group EPS to grow at a 12% CAGR from 48.8p in FY26 to 61.6p in FY28. The note also states that GE Vernova and Siemens Energy together account for approximately 80% of Bodycote's IGT revenues.
Rotork: limited runway from core markets
Rotork's largest division is oil and gas, which makes up about 45% of group revenue and is forecast by Barclays to grow only 0% to 3% annually through FY28. The company's gas turbine exposure is geographically skewed toward Europe and Asia rather than the faster-growing U.S. market, where the note identifies Emerson as the dominant operator.
Barclays reports that nuclear work, which Rotork re-entered at the start of FY25, is expected to remain small for the group - roughly 2% of group revenue by FY28 under Barclays' estimates. The brokerage models group EPS to compound at 7% from FY26 to FY28, rising from 17.3p to 19.6p.
Sector-wide demand signals
Barclays' note places these company-level forecasts in the context of broader market supply and demand dynamics. It cites projections from the International Atomic Energy Agency that global nuclear installed capacity could reach between 561 GW and 992 GW by 2050, up from 379 GW today. On the gas turbine side, the brokerage reports that OEM gas turbine order books are effectively sold out into 2028 and beyond, and that global gas turbine orders in Q4 2025 reached about 34 GW - an increase of approximately 134% year-on-year.
The Barclays analysis frames nuclear and industrial gas turbines as multi-year investment catalysts for select capital goods companies, while the scale and geography of exposure will determine which firms capture the most upside.