Berenberg downgrades Victrex to 'hold' from 'buy'

The bank had upgraded the shares last July amid expectations of troughing volumes, improving cash flow and gross margin expansion.

"We were wrong on the last point, as underutilisation costs and negative mix from the ramp-up of China are more than offsetting lower raw material costs, and this could continue in 2025," it said.

"Victrex is guiding for a fiscal H2 volume recovery, but nobody likes back-end-loaded performance."

Berenberg said initial data points from other companies in the sector such as BASF are turning it more cautious on the prospect of volume recovery in 2024 and it thinks Victrex’s performance in industrial-exposed sectors could remain subdued for longer than it previously anticipated.

Berenberg said the valuation is supportive on its reduced estimates "but not terribly cheap".

The bank cut its price target on the stock to 1,680p from 2,090p.