Last week the broker held investor meetings with Joy Global chief financial officer Jim Sullivan and Joy Global Surface Mining vice president of finance Bryan Johnston.

Sullivan’s views relating to potential takeover activity were put down as part of “other interesting insights” in the resulting client note from JP Morgan.

“CFO noted that the Joy board considers Joy a ‘scarce asset’ and will bear that in mind should an offer be made for the company (ie it will not sell the company at a fire sale price),” the broker commented.

JP Morgan said the overall management tone was downbeat as fundamentals have weakened even since early June.

The broker said customers were continuing to conserve cash be deferring maintenance, including by parking equipment and cannibalising it for spare parts.

“Additionally, customers continue to insource the labour component of service and are pushing on suppliers to take spare parts back into their inventory.

“On a more positive note, management is upbeat about its opportunities in hard rock mining as it has a technological advantage (mechanical continuous cutting vs drill and blast) that customers are requesting; additionally, the CFO noted it should beat the $60 million footprint optimisation target.”

JP Morgan has a neutral rating on Joy Global. The shares were down 32% year-to-date when the report was released on Friday but this was seen in a positive light.

“In our view much of the downside is now baked into the stock,” JP Morgan said.