Spirax Earnings: Guidance of Double-Digit Profit Growth Confirms Challenges in 2023 Were Temporary

Wide-moat Spirax Group’s fiscal 2024 guidance of double-digit operating profit growth confirms our view that the challenges it faced in fiscal 2023, which saw organic revenue decline by 1%, were cyclical and not structural. Upbeat guidance for fiscal 2024 has ended the market's concerns that the destocking trend in fiscal 2023 reflected the group's long-term outlook, sending shares 11% higher. Our forecasts had incorporated a recovery in demand during fiscal 2024, broadly in line with management's expectations, and thus we maintain our GBX 10,600 fair value estimate. Following the jump in the share price on March 7, we view shares as fairly valued.