Bodycote's shares leapt 12 per cent immediately after the heat treatment specialist issued a highly bullish trading update earlier this month. Following a "steady and broad" improvement in demand during the second quarter, management now thinks that operating profits will be "significantly above" the upper end of analysts' expectations - that's provided current demand levels are maintained.
As we explained in our recent sell tip, such surprises were always going to be short term. Bodycote is the most operationally geared of the UK engineers, particularly after savage cost-cutting over the past 18 months. And analysts have a track record of underestimating the power of operational gearing - both on the upside and the downside.
When: 2/07/10
Price: 198p
Tip performance to date: -7.6%
