Filtronic (LSE: FTC) shares have been on a wild ride in 2026 – after starting the year at 176p, they surged all the way to 480p before falling back to 265p. As I write this on Friday (12 June), they’re sitting at 330p, up 88%.
The question is, are the shares worth 200p or 500p today? Let’s take a look at the fundamentals.
A British success story
While it’s still a relatively small company (its market-cap is around £725m), there’s no doubt that Filtronic is a British success story. In recent years, this company’s been providing wireless communication products to SpaceX and generated a ton of revenue in the process.
The fact that it has a key partnership with SpaceX says something about the sophistication and quality of its products. It’s unlikely that the world’s largest space company would be incorporating Filtronic in its supply chain if the UK company didn’t have top-shelf products.
It’s worth noting that as part of their expanding commercial agreements, SpaceX holds equity warrants in Filtronic. This gives it the right to subscribe for up to 10% of Filtronic’s total share capital, tying the two companies together quite closely.
Strong financials
The success the company has been having – not only with SpaceX but also other major industrial companies – can be seen in its financials. Over the last five years, its revenues have soared.
For the financial year just ended (31 May), revenue is expected to come in at around £55m. Five years ago, it was just £15.6m.
Zooming in on profits, these have also soared. Last year, net profit was £14m versus £0.01m five years earlier.
Looking beyond growth and profitability, the company also has a strong balance sheet. So overall, there’s a lot to like in its financials.
How much is it worth?
Going back to the question at the top though, how much is this company really worth? Is it fairly valued today at 330p, or over/undervalued?
My take is that it’s overvalued at present. Because at the current share price, the forward-looking price-to-earnings (P/E) ratio is about 83.
That strikes me as a little high, despite all the positive things I said above. To my mind, a P/E of 50 might be more appropriate (that’s still more than three times the UK market average).
That would give us a share price of around 200p using this year’s earnings forecast. So I see fair value today closer to 200p than 500p.
Analysts are more bullish
I’ll point out that City analysts are more bullish than me. Currently, the average price target for Filtronic is 287p. Meanwhile, analysts at Berenberg have a target of 360p. So maybe my fair value assessment of around 200p is a little low.
I just feel it’s important not to get too carried away with the valuation here because there are risks that could derail the growth story. For example, a lot of growth in recent years has come from SpaceX deals and there’s no guarantee that these will continue.
Given my assessment of the fair value, I’m not a buyer at current levels. But if the stock were to continue dropping and came back to near 200p, I could be tempted to have a nibble.
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Edward Sheldon does not hold any positions in the companies mentioned
