Filtronic (LON:FTC), the designer and manufacturer of components and subsystems for complex antennas, has issued a significant trading update ahead of its interim results for the six months ending 30 November 2024. The company is now expecting FY25 results to surpass previous forecasts, a development that highlights Filtronic’s strong performance and promising growth outlook.
Cavendish, the company’s corporate broker, has upgraded its FY25 adjusted profit before tax (PBT) forecast from £7.7m to £9.6m, reflecting this stronger-than-expected momentum. The target price remains unchanged at 91.9p, representing a 28% upside from the current share price.
Key Growth Drivers
The standout driver for Filtronic’s impressive performance is its partnership with SpaceX, where it supplies E-band solid-state power amplifiers for the ground stations supporting the Starlink low-earth orbit satellite constellation. Filtronic’s AGM statement on 31 October indicated robust demand in the first half of FY25, particularly from retrofitting amplifiers onto existing Starlink ground stations. Based on the latest update, revenues are expected to remain elevated in the second half as well.
Another growth opportunity for Filtronic lies in the aerospace and defence markets. According to Cavendish, the company is well-positioned to expand further in the UK defence market, with potential entry into overseas markets, including the United States. As the UK government’s strategic defence review wraps up in the summer of 2025, Cavendish believes Filtronic could see accelerated expansion in this sector.
Upgraded Forecasts and Positive Outlook
The updated forecasts reflect a notable uplift in revenue and profit. Cavendish now expects FY25 revenue to rise to £43.4m, up from the previous estimate of £40.5m. Adjusted EBITDA is forecast to hit £11.2m compared to the earlier £9.3m. Cavendish is also including a non-cash charge in FY25, relating to the vesting of warrants held by SpaceX as part of the partnership agreement.
Edward Stacey, Director of Research at Cavendish, stated:
“We believe Filtronic has a strong growth outlook for FY25 and for the medium term with good visibility on its underlying drivers, including the Starlink partnership. Our price target of 91.9p represents 28% upside to the current level.”
Valuation and Final Thoughts
With clear growth drivers such as the SpaceX partnership and the potential for defence market expansion, Filtronic is on a positive trajectory. The upgraded FY25 forecasts and 28% upside reinforce confidence in the company’s strategic direction.
Cavendish’s target price of 91.9p underlines Filtronic’s strong growth potential as it delivers on key opportunities in satellite communications and defence markets.
