Victrex Earnings: Shares Drop on Weak Volumes

Narrow-moat Victrex reported first-half profit before taxes of GBP 43 million, down 15% in constant currency terms versus the prior-year period. Average selling prices were up a strong 18% due to pricing actions, mix, and foreign exchange. However, the 14% decline in volumes was below previous company expectations, which is likely the reason shares were down 8%-10% intraday as the full-year company compiled consensus estimates now look out of reach. We expect to trim our near-term estimates but don’t expect to make a material change to our GBX 2,100 fair value estimate. At current levels, the shares look undervalued.