Jefferies opened 2026 with a cautious view of the UK industrials landscape, noting weak manufacturing indicators and uneven demand across end markets. Against that macro background, the broker selected seven stocks it regards as most attractive on the basis of individual business attributes and clearer near-term earnings visibility rather than any expectation of an imminent, sector-wide cyclical recovery.
Below are Jefferies’ preferred names and the firm-level factors it cited in support of each call.
Bodycote - Jefferies assigns a "buy" rating and 920p target. The shares were quoted at 772p on Jan. 22. Jefferies’ earnings per share (EPS) estimates are 48.40p for 2024, 43.70p for 2025 and 47.94p for 2026, implying a 2026 price-to-earnings (P/E) multiple of 16.1x. The brokerage highlights Bodycote’s exposure to civil aerospace and its cash flow profile as reasons for inclusion among preferred names, while acknowledging that 2025 proved challenging amid weaker macro conditions.
Chemring - Rated "buy" with a 660p price target, up from 640p, with the stock at 516.00p at the close referenced. Jefferies forecasts EPS of 19.35p for 2024, 19.42p for 2025 and 20.82p for 2026, corresponding to a 2026 P/E of 26.6x. The firm pointed to Chemring’s geographic diversification and its exposure to defence markets, areas that were among the stronger-performing segments in the UK industrials space in 2025.
Elementis - Jefferies keeps a "buy" rating and a 210.00p target; the stock closed at 169.00p. EPS estimates are presented as ¢13.52 for 2024, ¢13.36 for 2025 and ¢14.97 for 2026, translating into a 2026 P/E of 15.3x. Jefferies drew attention to Elementis reporting margins ahead of peers despite weak end markets and noted the company’s balance sheet position as a factor in its assessment.
Volution Group (FAN) - Listed under ticker FAN, Volution is rated "buy" with an 840p target; shares were 642p at the close cited. Jefferies’ EPS projections are 27.95p for 2024, 33.13p for 2025 and 36.47p for 2026, implying a decline in the P/E multiple from 23x in 2024 to 17.6x in 2026. The broker referenced Volution’s operating performance through mixed market conditions and its recent acquisition activity as supportive elements for its preferred status.
IMI - The stock remains a "buy" with a price target raised to 3,185p from 2,720p; the shares closed at 2,732.00p. Jefferies’ EPS estimates are 122p for 2024, 129.85p for 2025 and 137.60p for 2026, giving a 2026 P/E of 19.9x. The firm noted IMI’s ongoing operational and financial progress and forecast steady growth over the report’s time horizon.
Rotork - Also rated "buy," Rotork carries a 460p target, raised from 440p, and closed at 348.40p. Jefferies projects EPS of 15.80p for 2024, 16.70p for 2025 and 18.00p for 2026, implying a 2026 P/E of 19.4x. The brokerage described Rotork’s fundamentals as among the strongest in its UK industrials coverage, with capital allocation and balance-sheet metrics forming part of its current evaluation.
Spirax Group - Newly added to Jefferies’ most preferred list, Spirax is rated "buy" with a price target lifted to 8,715.00p from a prior 8,040p; the stock closed at 7,370p. EPS estimates are 285.62p for 2024, 283.04p for 2025 and 311.36p for 2026, equating to a 2026 P/E of 23.7x. Jefferies said the company is positioned for an earnings recovery after several years of muted growth, according to its forecasts.
On an aggregate basis across the UK Industrials coverage, Jefferies estimates average EPS growth of 3% in 2025, with share prices in its coverage up roughly 11% during the year. For 2026, the brokerage expects average organic constant-currency sales growth of about 4% and EPS growth of about 8%, explicitly noting that this latter figure excludes XP Power.
Jefferies’ selection underscores a stock-picking approach driven by idiosyncratic strengths - cash flow quality, defence exposure, margin resilience and balance-sheet positioning - rather than a reliance on a synchronised manufacturing rebound. That emphasis aligns with the firm’s view that end-market conditions remain uneven even as individual companies demonstrate differentiated performance.
Summary
Jefferies has identified seven UK industrial stocks as top picks for 2026, basing its preferences on company-specific indicators such as cash flow, geographic exposure, margins and balance-sheet health. The broker provides detailed EPS forecasts, P/E multiples and price targets for each name while warning that the wider manufacturing backdrop remains weak.
Key points
- Jefferies prefers seven stocks - Bodycote, Chemring, Elementis, Volution Group (FAN), IMI, Rotork and Spirax Group - on company-level fundamentals rather than a sector rebound.
- The broker supplies explicit EPS projections and 2026 P/E multiples for each name, showing varied valuation trajectories across the group.
- Across its UK Industrials coverage Jefferies expects modest EPS growth in 2025 and stronger organic sales and EPS growth in 2026, excluding XP Power.
Risks and uncertainties
- Persistent weakness in manufacturing and uneven end-market demand could continue to weigh on industrials more broadly, impacting revenues and margins.
- Company-level challenges in 2025 - as cited for Bodycote - demonstrate that individual operating environments can remain difficult despite longer-term forecasts.
- Jefferies’ 2026 EPS and sales projections exclude XP Power, which introduces uncertainty around sector-wide metrics if firms outside the coverage perform differently.
These risks primarily affect industrials and related supply-chain sectors, as well as equity market sentiment for UK-listed industrial firms.