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Investing.com -- Shares of Spirax Group Plc (LON:SPX) jumped more than 15% on Tuesday after the company posted first-half 2025 earnings that beat expectations by 5%, supported by stronger margins and sales growth in key divisions.
The UK-based industrial thermal energy and fluid technology company reported EBIT of £159 million for the period, above consensus forecasts of £151 million.
Group EBIT margins reached 19.3%, compared with 18.6% expected. Organic sales grew 3%, in line with the company’s target of matching 2024’s growth rate of 3.4%.
“We expect a modest reduction in consensus EBIT margins for ETS for FY25 given that management continue to flag that 2H25 operational leverage will still be partially offset by shipments of residual lower margin medium voltage orders,” said analysts at Morgan Stanley (NYSE:MS) in a note.
Electric Thermal Solutions led the performance, recording 10% organic sales growth, helped by increased semiconductor demand and a large contract to supply temperature management equipment to data centers.
Operating profit in the division grew 12% organically, with margins at 15%. Management expects slower growth in the second half due to tougher comparisons but said demand conditions remain strong.
Watson-Marlow recorded a 2% rise in organic sales in the half, with EBIT margins improving to 25.9% from efficiencies and operating leverage.
Orders in its biopharma business rose more than 10%, pushing the book-to-bill ratio above 1 for the first time since 2021.
The company expects revenue growth in the division to accelerate to high single digits in the second half.
Steam Thermal Solutions sales were flat year over year but rose 3% excluding China and Korea.
Demand for large projects in both markets remained weak. The company expects growth to return in Korea in the second half and for weakness in China to ease. Margins in the division were broadly flat at 23.4%.
Guidance for 2025 remains unchanged, with organic revenue growth expected to be similar to 2024 and mid-single-digit growth in operating profit, offset by a 6% foreign exchange headwind.
The company’s full-year consensus operating profit estimate stands at £330 million, compared with £334 million in 2024.
The results leave the implied split for 2025 EBIT at 48% in the first half and 52% in the second half, broadly in line with historical patterns.
“While we expect relatively limited changes to FY25 consensus EBIT, we think this will build confidence that the downgrade cycle for Spirax is coming to an end, potentially allowing for valuation multiples to start to re-rate,” Morgan Stanley said.