Spirax: Weak Markets Trumped “Quality” in 2024, May Again in 2025
Company Update (SPX LN) (Buy): Stock is at ~24x trough EPS based on guidance, but a return to high growth seems far off with current macro.
Highlights
2024 results were as expected, but new 2025 outlook assumes little growth.
Low-single-digit CAGR since 2019, despite high business quality.
We got the cycle wrong and under-estimated existing temporary savings.
Stock can jump when end-markets rebound, but unlikely to do so soon.
At 6,910p, we expect a 49% total return (11.5% p.a.) by 2028 year-end. Buy.
Introduction
We review our Buy rating on Spirax after the release of full-year 2024 results last Tuesday (March 11). Shares fell 3.9% that day but have since recovered, though they are still down 33% from a year ago:
Spirax Share Price (Last 1 Year)
Source: Google Finance (19-Mar-25).
We initiated a Buy rating on Spirax last July, and added it to our “Select 15” model portfolio as a mid-sized position in the same month. Shares have lost 17% since our initiation, while the U.K. Pound has risen ~2.5%. We last wrote about Spirax in October, after their investor day, and the stock is back to where it was back then after a volatile 5 months.
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