08.01.2025
Ahead of Filtronic (LON:FTC) announcing its Interim Results to end-November, possibly on Monday 4th February, I have noted that its shares are moving gently better.
Last night they closed up 8.22% better at 82.25p, on the back of a massive chunk of trading in the stock.
Some 8.04m shares changed hands, which is some eight times the normal dealing average.
That values the group at around £180m.
Aiming Higher
And I feel that they are heading even higher still, with that magic 100p level not being that far away.
Recent Guidance
We already know that the Interims will be positive after the company updated the market on Monday 16th December, when the designer and manufacturer of products for the aerospace, defence, space and telecoms infrastructure markets, gave out fresh guidance to the market.
It stated that:
“The Group expects to report a strong set of results for the period with significant growth in revenue and profits.
Customer demand remains robust with the second half benefitting from pull-forward of customer orders.
Consequently, the Board now expects to deliver stronger results for the full year than current market expectations.”
Management Comment
CEO Nat Edington stated that:
"We are delighted with the continued momentum that we have achieved and look forward to focussing on delivering these increased expectations over the remainder of the year."
The Business
The Sedgefield, County Durham-based group is an expert in the design, manufacture, and testing of high-performance radio frequency components.
It designs and manufactures products that transmit, receive and condition radio waves, particularly at microwave and mmWave frequencies.
Mission-critical communication networks depend on its systems and components.
The group’s markets are: Telecommunications infrastructure (4G and 5G); Critical communications; Space; Aerospace and defence; Trackside to train; and Test and measurement.
In the last year or so it has won several major orders, including contracts with SpaceX, as it continues to support the deployment of the Starlink constellation with E-band technology.
Brokers View
After the latest Trading Update, analysts Edward Stacey and Kimberley Carstens, at broker Cavendish Capital Markets, increased their estimates for the current year to end-May 2025 to show £43.4m (£25.4m) of revenues, while almost tripling their adjusted pre-tax profits to £9.6m (£3.4m), and trebling the expected earnings per share to 4.0p (1.4p).
They reckon that the biggest revenue growth driver for Filtronic in FY25 has been its partnership with SpaceX, providing E-band solid-state power amplifiers for the ground stations that link the Starlink low-earth orbit satellite constellation to terrestrial networks.
The analysts have a Target Price of 91.9p for the group’s shares.
They note that the group has a strong growth outlook for FY25 and for the medium term with good visibility on its underlying drivers including the Starlink partnership.
The brokers value the shares using a medium-term valuation scenario based on £50m of revenue potential.
My View
In my opinion, this group’s shares are heading up towards the 100p mark, which will have shown a magnificent price run within the last year or so.
Stay strapped in and Hold very tight.
(Profile 04.02.22 @ 11.6p set a Target Price of 14.5p*)
(Profile 04.01.24 @ 21p set a Target Price of 24p*)
(Profile 26.06.24 @ 67p set a new Target Price of 80p*)
(Asterisks * denote that Target Prices have been achieved since Profile publication)
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