Victrex’s Q3 Remains Solid; Trimming FVE on Margin Pressure and Lower 2023 Growth

Narrow-moat Victrex reported third-quarter volumes of 1,323 metric tons, up 10% over the prior-year period. Revenue was up 16%. Demand remains solid and the order book is healthy going into the fiscal fourth quarter. However, we have adjusted our near-term margin estimates down on cost inflation and reduced fiscal 2023 volume growth expectations as headwinds build in the economy. Consequently, we are trimming our fair value estimate to GBX 2,100 from GBX 2,250. However, the shares continue to look undervalued.