Morgan Stanley has analyzed the European engineering sector for 2025 - which it expects to be a year clearly divided. Bloomberg News reports.

In the first half of the year, there is expected to be some optimism around the short-cycle companies, but this recovery is ultimately likely to be affected by growth headwinds.

According to the bank, it will remain selective around cyclicals in the first half of the year, before a shift towards more construction-exposed names in the second half.

What is said to differentiate the companies next year is how margins develop. Here they are positive on Gea Group and Weir, while potential disappointments are thought to arise at Kone, Epiroc and Metso.

In the mining equipment sub-category, Weir is now the preferred name as it is expected to exceed its 2026 operating margin target and have better free cash flow. At the same time, Epiroc is avoided as the competitive advantages now seem less clear, according to the bank.

Weir gets a double upgrade in the analysis to outperform, while Epiroc is cut to underweight. The analysis also raises Investor companies Atlas Copco and ABB to equal weight. New top pick in the sector is Siemens.