Solid Finish for Victrex; Next Year More Challenging

Narrow-moat Victrex reported full-year volumes of 4,727 metric tons (1,140 metric tons in the fourth quarter) and underlying profit before tax of GBP 95.6 million, broadly in line with company-compiled consensus. Gross margin was down 280 basis points due to raw material and energy cost inflation and the lag for price increases to recover these higher expenses. Fiscal 2023 guidance was typically nonspecific with the group indicating that further improvements on fiscal 2022 volumes will be challenging. We expect to trim our fiscal 2023 estimates modestly, but don’t expect to make a material change to our GBX 2,100 fair value estimate. At current levels, the shares look undervalued.