Filtronic Cleans Up And SRT Marine Systems Sinks
Filtronic (LON:FTC) – Up 260% Since Early January But Don’t Chase
Yesterday morning the designer and manufacturer of products for the aerospace, defence, telecoms infrastructure and low earth orbit space markets, declared that it was pleased to announce the outlook for both 2024 and 2025 will now exceed current market estimates.
CEO Richard Gibbs stated:
“The Filtronic team has always excelled in delivering world-class products to our core markets.
The recent investments in our engineering and operations team have enhanced our ability to deliver innovative, cost-effective RF solutions to a demanding timescale, and this in turn has positioned us well with some of the largest space and aerospace customers in world.
It is pleasing to see this effort being recognised in our financial results.”
Analysts Edward Stacey and Kimberley Carstens, at Cavendish Capital Markets, have upgraded their estimates for both the current year to end April and for 2025.
On the 2024 revenues rising to £24.5m (£16.3m), the group could see adjusted pre-tax profits coming out at £3.3m (£0.1m), worth 1.3p in earnings per share.
For the year starting in the middle of next week the analysts estimate sales of £36.0m and profits of £6.4m, generating 2.7p in earnings per share.
In reaction they now go for a Price Objective of 57.4p.
Yesterday the group also announced a 5-year strategic partnership with SpaceX, with a £16m 2025 order.
The group’s shares leapt over 66% to touch 55.0p before closing last night at 49p, up some 48% on the day, with well over 10m shares traded.
On the back of so much better business it was good to see the group’s shares almost exploding in price.
By the day’s High that means they have risen by 260% since my early January Profile on the company.
However, I certainly would not chase them at these levels, let us see just how the 2024 year does actually shape out, come the results in August.
(Profile 04.02.22 @ 11.6p set a Target Price of 14.5p*)
(Profile 04.01.24 @ 21p set a Target Price of 24p plus*)
SRT Marine Systems (LON:SRT) – Late Reactions – How Very Disappointing
The shares of this maritime surveillance company crashed on Tuesday afternoon, with some 790,600 shares traded.
The price fell from 29.50p overnight, a level at which the shares have held for the last month or so, to as low as 23p.
Yesterday morning, with no overnight news to explain the sudden price fall, rumours quickly spread, taking them down to 20.03p on the back of 1.65m shares being traded before the company put out its delayed statement:
“SRT notes the recent share price movement and reporting in the Philippine press with regard to the IMEMS fisheries project.
SRT wishes to clarify that the IMEMS contract was won following a competitive international tender, which has been successfully implemented and is operational.
On Monday the Ombudsman confirmed that both SRT and Richard Hurd are cleared, but has recommended further investigation into Simon Tucker and other individuals outside of SRT.
The Board is fully supportive of Simon who is now working to clear his name.
Our work continues as normal as we carry out our contractual obligations to ensure a first-class fisheries monitoring and management system capability for the benefit of The Philippines.
Trading remains in line with market expectations.”
That the Philippine press was publishing its knowledge, before the London market and the company’s shareholders got to know anything, was not a very bright move by the SRT Management, nor its advisers.
It was even a very hot topic of Bulletin Board discussion on Tuesday evening.
The very minimum action should have been a quick release before the market closed on Tuesday night.
However, it took until 09.48hrs on Wednesday morning before the above words were published.
Frankly, that was extremely disappointing and more clarity about the situation is now necessary, in my view, and probably the same view of investors who came into the group’s equity with fresh cash at 50p a share in June 2023 and then again at 35p last December.
I also wonder just what the Ocean Infinity Directors must be wondering right now, at that time they paid £7m for new shares at 35p each and are now holding 8.98% of the SRT equity and are now down over 40% on their investment.
As for Cavendish Capital Markets, the group’s brokers, not being faster to respond to a near 30% drop in the SRT share price, surely is hat to be questioned about its tardiness.
On Friday 8th March their analysts Kimberley Carstens and Michael Hill, who have a Price Objective of 100p on the shares, revised their estimates for the group’s performance in the extended 15-month period to end June 2024, showing revenues of £70.9m (12 months £30.4m), with adjusted pre-tax profits of £5.7m (loss of £0.3m) and earnings of 2.9p (0.2p) per share.
For the year to end June 2025, the brokers go for £104.8m revenues, £11.9m profits and earnings of 5.3p a share.
Considering that the group has a very large pipeline of potential orders to add to its existing Order Book, investors could well now take a massive ‘averaging’ gamble on its shares, which closed last night at 22p after some 3m shares having been traded during the day.
On the assumption that the broker’s analysts know the company well enough to stick to their estimates, then I will now put out a new Target Price of 35p on the group’s shares.
(Profile 14.09.20 @ 39.5p set a Target Price of 50p*)
(Profile 10.11.23 @ 39.75p set a Target Price of 60p)
(Profile 25.04.24 @ 22p set a new Target Price of 35p)
(Asterisks * denote that Target Prices have been achieved since Profile publication)
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