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Filtronic – shares sparked by ‘ahead of expectations’ trading update

By Steve Moore | Friday 12 May 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Shares in electronics products for the wireless telecoms infrastructure and related markets-focused, Filtronic (FTC) are currently the highest risers of the day. This on the back of a “Trading Update” announcement.

The announcement includes that Wireless business trading during the final quarter of the company’s year ending 31st May “has been ahead of previous management expectations” and that despite also “some marginal, short-term weakness in trading in Filtronic Broadband, the board now expects total group revenue of approximately £35million in the year… with a commensurate increase to operating profit, both of which are ahead of market expectations”.

This has seen house broker to the company, Panmure Gordon, increase its EBITA forecast for the year from £1.1 million to £1.6 million and earnings per share to 0.5p.

Though it expects a recovery to continue – a forecast of £2.9 million of EBITA, generating earnings per share of 1.2p for the upcoming year, I note following the August announcement of last year’s results there were profit forecasts of £1.4 million, generating earnings per share of 0.5p, rising to £3.2 million, generating earnings per share of 1.2p. The shares were then 13.6p, and are currently approaching 13p today.

There does look to be a potentially interesting recovery story here, but having previously noted cash generation improvement looked to be needed and customer concentration concerns, I’ll await the greater detail of an update to “be provided following the end of the company's financial year” and, likely, the subsequent results statement before considering a purchase here. Currently, on the watchlist.

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