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Victrex is set for strong growth, Credit Suisse says
Victrex's growth is likely to accelerate over the next eight years as new applications for its PEEK polymer become more popular, Credit Suisse analysts said in a note to clients.
The plastics maker can generate up to 11% compound annual growth to 2020 and 9% to 2025, the analysts said. They reiterated their 'outperform' rating on Victrex and increased their price target to £28 a share from £26.50.
"Mega-programmes" in the pipeline include automotive gears, aerospace and consumer electronics. Those programmes can deliver about £100m of £190m forecast revenue growth to 2025, according to Credit Suisse.
Investors have been concerned about lots of new capacity at Victrex's competitor Solvay. But Victrex's prices and margins have held up as Solvay has increased capacity. After losing 750 tonnes of business from a smartphone maker "the volume headwind from this loss of business is over", Credit Suisse said.
Larger volumes will more than offset price falls of about 1% a year as the PEEK industry scales, the analysts said.
At 1310 BST, the shares were up 2.3% to 2,536p.