24th Jan 2023 14:19
(Alliance News) - Investors were encouraged by Senior PLC's trading update on Tuesday, which said that the company expects annual profit to top consensus.
"Senior's trading update is short and to-the-point, and should be a positive catalyst for the shares," Jeffries analysts said.
Shares were 9.3% higher at 149.10 pence each in London on Tuesday afternoon.
The components and systems manufacturer expects adjusted pretax profit to beat market consensus. Senior puts the consensus range at GBP16.2 million to GBP18.0 million. In 2021, it had made a GBP1.9 million adjusted pretax loss, narrowing from GBP6.2 million in 2020.
Senior said its Aerospace division traded in line with expectations.
The company suffered from pandemic-driven supply chain weakness at an industry level last year. The Hertfordshire-based firm's fortunes improved in 2022, however.
"Trading in the Flexonics division has been ahead of previous expectations, driven by strong customer demand in the land vehicle and power & energy markets. In particular, demand for heavy duty truck and the levels of maintenance and overhaul in power & energy have improved since the last trading update" the company said.
The Flexonics division provides thermal management for drivetrains.
In the Aerospace arm, where Senior has customers in the miliary and commercial aircraft industries, trading was "in line with expectations".
Jeffries analysts said: "This is a positive update, and while short, we welcome the better-than-expected trading and improving trends in Flexonics. The resultant upgrade to FY22F consensus should be well-received by the market, and should be a welcomed fillip for investors. We would expect the shares to go nicely better on the back of this update."
Looking ahead, Jeffries said it expects "meaningful" upgrades to financial year 2022 forecast consensus.
"We also remain upbeat/confident about the Aerospace recovery over the next few years, which bodes well for the group's wider recovery potential," it added.
Peel Hunt was less effusive in its praise.
Peel analyst Henry Carver said: "Our initial instinct is to leave 2023E essentially unchanged but with more confidence."
Carver also noted that "there was no comment on cash," an area which he said Senior "excelled" in during 2022.
Jeffries rates Senior at "buy", with a price target of 190.00 pence. Peel Hunt also rates Senior at "buy", with a target price of 175.0 pence.
Senior expects to report annual earnings on February 27.
By Sophie Rose, Alliance News reporter
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