Victrex now fully valued, thinks Berenberg

Polymers manufacturer Victrex has had a good run, but as far as analysts at Berenberg were concerned, it was time to downgrade the firm to 'hold' as it was now fully valued.

After seeing shares rally roughly 20% since September, outperforming the European chemicals sector by over 15%, Berenberg dropped Victrex from its 'buy' rating as its stock had reached the price target of 2,700p.

"Investors have clearly warmed to a combination of volume-driven 2018 earnings upgrades and progress towards implementing the company's downstream pipeline," Berenberg's Tuesday morning research note read.

"But the absence of further upgrades and [the] prospect of FX-headwinds leaving earnings flat-down in 2019 leave little scope for a further re-rating, in our view."

Berenberg noted that Victrex's dividend yield of 4.6% was still "attractive" compared to the Stoxx 600 Chemicals average of 2.9%, but saw "limited upside" without any earnings upgrades from the drugmaker.

The analysts left their price target on Victrex unchanged, noting that while there was clearly scope for the company to re-rate further in the long term, especially if it delivers on its pipeline ambitions, FX and tougher comparable numbers are likely to limit the group's near-term upside.