Victrex Delivers Strong Volume Growth but Margin Expectations Tempered; Shares Fairly Valued

In its first-quarter trading update, narrow-moat Victrex reported revenue of GBP 74.6 million and volume of 1,025 metric tons, up 9% and 16%, respectively. Shares traded down 2% intraday, in line with the group. Our full-year volume expectation of 4,662 metric tons is above consensus and we remain confident in that number. Previous guidance for fiscal 2022 gross margin was in line or slightly better than fiscal 2021 (54%). However, with energy and raw material inflation continuing to rise, that now seems optimistic. We will likely trim our near-term margin forecast but don’t expect to make a material change to our GBX 2,250 fair value estimate. At current levels, the shares look fairly valued.