Wednesday, August 21, 2024 – Victrex (LON:VCTX) Plc. (VCT:LN) (OTC: VTXPF) received an upgrade in its stock rating from 'Underperform' to 'Hold' by a Jefferies analyst, with a revised price target set at £11.00, a decrease from the previous target of £11.50. The decision to upgrade the specialty chemicals company is attributed to its current valuation relative to the market.
The analyst's decision is based on the stock's performance relative to the UK Industrials sector and its peers within the UK Chemicals group. Victrex's shares have experienced a significant decline, falling 26% since the previous downgrade in January. This contrasts with the overall UK Industrials sector, which has seen a 6% increase in the same period.
Consequently, Victrex now trades at a 12% to 17% discount on a forward FY25F Price/Earnings Ratio (PER) and Enterprise Value/Earnings Before Interest, Taxes, Amortization (EV/EBITA) basis compared to its peers.
Despite the upgrade, the analyst maintains a cautious stance on Victrex due to concerns about long-term volume growth and the potential need for a structural pricing reset. The company's EBITA margins are recognized as being at the higher end within the sector, yet the broader market conditions remain challenging.
The analyst also notes potential upside from 'mega-programmes,' suggesting that these could offer opportunities for volume and return improvements in the medium term.
This factor contributes to the rationale behind the revised rating, as the stock is considered to be priced with further downside risks already factored in.
Victrex specializes in high-performance polymers and is known for its PEEK and PAEK-based solutions, which are used across various industries including aerospace, automotive, and healthcare.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.