FoggyIsle.XYZ | Market's view on Senior

Senior plc’s trading update for Q1 2024 shows trading in line with expectations, with a 7% year-on-year growth in Group revenue on a constant currency basis.
Aerospace revenue increased by 12% year-on-year, driven by strong growth in commercial aerospace. Flexonics saw good growth in downstream oil & gas and nuclear sectors, while land vehicle sales remained resilient. However, Flexonics revenue saw a 2% year-on-year decrease due to a rebalancing of inventory by upstream oil & gas customers.
The outlook for 2024 remains unchanged, with the Board anticipating good growth for the Group. The Group’s diversified position across key civil and defence aircraft platforms and increasing aircraft build rates are expected to contribute to this growth.
Senior plc has been awarded a 5-year contract extension by Spirit AeroSystems Holdings, Inc. for the supply of large diameter precision formed and machined structural components for Boeing aircraft programs such as the 777, 777-9, and 737 MAX family, valued at approximately $130 million.
The contract extension will commence in January 2026, and manufacturing will be undertaken at Senior Aerospace Jet Products’ facility near San Diego, California.
There is a potential slowdown in the land vehicle market in 2024 and a possible normalization of the growth in the Flexonics division, but overall Aerospace is expected to support the Group’s performance.
Senior’s involvement with Boeing’s 737 MAX, which accounted for 6% of group revenues in 2023, is noted, with expectations for higher Max sales in 2024 regardless of production rates.
There is speculation about a possible sale of the Aerostructures business, with significant preparatory costs incurred in 2023 for potential divestment activities. Strata from Abu Dhabi is suggested as a potential buyer.
Jefferies has raised the price target for Senior plc to 215 pence from 195 pence, maintaining a ‘Buy’ rating. Meanwhile, Barclays has downgraded Senior plc to ‘Equal Weight’ from ‘Overweight’ with a target price of 168 pence, down from 205 pence.