Victrex Shares Rally On Better-Than-Expected First-Half Results; Shares Overvalued

Narrow-moat Victrex reported first-half underlying profit before tax of GBP 47 million, down 10% over 2020 but moderately above the Visible Alpha consensus. Demand momentum appears to be strong in most end markets and the second-half comparable is not challenging. However, management's tone on the second half was relatively cool, citing restocking in the first half and a slower-than-expected recovery in medical. With shares up 10% intraday, the market has apparently decided that management is too conservative. We agree and will likely increase our estimates, but not materially enough to warrant a 10% lift to our fair value estimate. At current levels, the shares look overvalued.