Victrex (LON:VCT) Posts Quarterly Earnings Results

Victrex (LON:VCT) announced its earnings results on Monday. The company reported GBX 17.20 earnings per share for the quarter, Digital Look Earnings reports. Victrex had a net margin of 9.50% and a return on equity of 6.40%. The firm had revenue of £147.10 million for the quarter.

Here are the key takeaways from Victrex’s conference call:

• Victrex’s H1 revenue rose 1% to GBP 147.1 million, helped by a strong Q2 and 6% volume growth, but pricing and mix offset some of the benefit.
• Profitability weakened, with underlying PBT down 18% to GBP 19 million and gross margin falling to 41.7% from 44.1% due to price pressure, mix, currency, and softer medical sales.
• Cash generation remained solid, with free cash flow of GBP 22 million, cash conversion of 109%, and net debt at a manageable 0.65x EBITDA.
• The company recorded a GBP 60.6 million non-cash impairment on its China manufacturing plant after concluding one production step is limiting capacity versus the original 1,500-ton nameplate. Management emphasized this is an operational issue, not a demand issue, and China demand remains strong.
• Management is taking aggressive restructuring actions, including a 10% global headcount reduction, a new decentralized operating model, and portfolio simplification, with a September capital markets day planned to detail the strategy and medium-term profit improvement plan.

Victrex Price Performance

Victrex stock opened at GBX 585.91 on Wednesday. The stock has a market capitalization of £510.47 million, a PE ratio of 18.42, a price-to-earnings-growth ratio of 1.92 and a beta of 0.75. The company has a debt-to-equity ratio of 11.30, a current ratio of 3.01 and a quick ratio of 1.99. Victrex has a 12 month low of GBX 515 and a 12 month high of GBX 845. The business has a 50 day simple moving average of GBX 605.36 and a 200-day simple moving average of GBX 643.46.

Analysts Set New Price Targets

VCT has been the subject of several analyst reports. Jefferies Financial Group lowered their target price on Victrex from GBX 675 to GBX 595 and set a “hold” rating for the company in a research note on Tuesday. UBS Group reaffirmed a “sell” rating and issued a GBX 575 price target on shares of Victrex in a research report on Monday. Canaccord Genuity Group reissued a “buy” rating and set a GBX 725 price objective on shares of Victrex in a research report on Monday, April 13th. Finally, JPMorgan Chase & Co. cut their target price on shares of Victrex from GBX 725 to GBX 625 and set a “buy” rating on the stock in a research note on Wednesday, March 18th. Two research analysts have rated the stock with a Buy rating, four have assigned a Hold rating and one has assigned a Sell rating to the stock. According to MarketBeat, Victrex presently has an average rating of “Hold” and an average target price of GBX 702.86.

Victrex Company Profile

Victrex plc, through its subsidiaries, engages in the manufacture and sale of polymer solutions worldwide. The company operates through two segments, Sustainable Solutions and Medical. It develops PEEK and PAEK based polymer solutions, and semi-finished and finished parts. The company also provides specialist solutions for medical device manufacturers; sells thermoplastic polymers; sustainable solutions for energy and industrial, VAR, automotive, aerospace, and electronics markets; and engages in trading activities.