Filtronic – Yet further SpaceX orders continue to drive this group, broker upgrades 2025 and 2026 year estimates, I see the shares, now 103p, going to 150p in due course

10.02.2025

The good news keeps on coming from the designer and manufacturer of products for the aerospace, defence, space and telecoms infrastructure markets, Filtronic (LON:FTC).

This morning the £228m capitalised Sedgefield-based group announced a significant new contract win with SpaceX, valued at $20.9m (£16.8m), which is due to be fulfilled in both FY2025 and FY2026.

CEO Nat Edington stated that:

"We are delighted to have secured this substantial order, which underscores Filtronic's reputation for delivering high-performance RF solutions to our market leading customer.

This contract, alongside our growing momentum in strategic markets, provides us with increased confidence in our ability to exceed our growth targets for FY2025 and FY2026.”

It was in April last year that the group announced a long-term partnership agreement with SpaceX, covering the supply of E-band Solid State Power Amplifiers for the ground stations which enable the Starlink Low Earth Orbit satellite network, as well as work on similar products at other frequencies.

Brokers Views

Recently analysts Edward Stacey and Kimberley Carstens at Cavendish Capital Markets, following the Interim Results, had raised their Target Price for the group’s shares from 91.9p to 110p.

They previously had estimates out for the current year to end May 2025 for revenues to increase from £25.4m to £48.4m, with adjusted pre-tax profits trebling to £11.5m (£3.4m), lifting earnings to 4.8p (1.4p) per share.

For the coming year, the analysts cautiously estimated £41.0m revenues, £8.0m profits and 3.0p in earnings per share.

But that was before today’s announcement, after which they upgraded their figures to show £50.4m revenues for this year to end May, with £11.9m profits and 5.0p per share in earnings.

Then for the 2026 end-May year they now go for £43.0m revenues, £8.3m profits and 3.2p earnings.

It is well worth noting that the analysts estimate that the group will have net cash balances of £10.8m (£5.2m) by end-May this year, then up to £15.9m for the 2026 trading period.

My View

If you had not already realised, I am a great fan of this £200m capitalised group.

It has such massive potential within the particular markets in which it is a leading supplier, despite its size.

Its markets, in space and defence, are absolutely massive, particularly with work for the SpaceX Starlink Low Earth Orbit satellite network increasing at a pace.

Filtronic has already identified its requirement for advanced facilities to handle this and other lines of demand from non-SpaceX clients, technology developments are progressing well to deliver on future product roadmap in conjunction with the group’s key customers, while two new production lines were recently installed to increase manufacturing capacity to support revenue growth.

I would suggest that we can expect to see additional order news being announced within months, which in turn will help to drive the group’s shares above the Cavendish Capital Markets Target Price of 110p.

The shares closed at 92.8p on Friday night, before opening up at 102.43p, before edging up to 107p at the best.

They are now 103p, but with further space to fill.

I believe that there is an excellent underlying momentum that is pushing Filtronic in both its business and in its share price.

Stay steadfast in your positions, while buying more if the price gets hit by profit-taking or general market sentiment.

This momentum could take the shares up to 150p in anticipation of further good news.

(Profile 04.02.22 @ 11.6p set a Target Price of 14.5p*)

(Profile 04.01.24 @ 21p set a Target Price of 24p*)

(Profile 26.06.24 @ 67p set a Target Price of 80p*)