Spirax Earnings: Lowering Our FVE by 9% After Disappointing Start and Guidance Cut; Shares Appealing

We’re lowering our fair value estimate in wide-moat Spirax Group by 9% to GBX 9,650 following its disappointing start to fiscal 2024 and reduction of its full-year guidance. Shares are trading 8% lower intraday, which we attribute to cyclical rather than structural reasons. We think there could be an element of conservatism baked into expectations by Spirax’s new executive team and believe its long-term outlook remains solid, underpinned by a recovery in its highest-margin Watson-Marlow segment. Shares are currently trading at an attractive 20% discount to our revised fair value estimate. We believe uncertainty surrounding the timing of a recovery in some of its material end markets and a somewhat untested new management team are weighing on the share price, which presents a buying opportunity for investors.