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Important information: The value of investments can go down as well as up so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. This is a third-party news feed and may not reflect Fidelity’s views.

Berenberg downgrades Victrex to 'hold' from 'buy'

(Sharecast News) - Berenberg downgraded Victrex on Tuesday to 'hold' from 'buy' as it said the company's performance in industrial-exposed sectors could remain subdued for longer than it previously expected. The bank had upgraded the shares last July amid expectations of troughing volumes, improving cash flow and gross margin expansion.

"We were wrong on the last point, as underutilisation costs and negative mix from the ramp-up of China are more than offsetting lower raw material costs, and this could continue in 2025," it said.

"Victrex is guiding for a fiscal H2 volume recovery, but nobody likes back-end-loaded performance."

Berenberg said initial data points from other companies in the sector such as BASF are turning it more cautious on the prospect of volume recovery in 2024 and it thinks Victrex's performance in industrial-exposed sectors could remain subdued for longer than it previously anticipated.

Berenberg said the valuation is supportive on its reduced estimates "but not terribly cheap".

The bank cut its price target on the stock to 1,680p from 2,090p.

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Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

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