Spirax-Sarco Maintains Full-Year Guidance as April Update Brings No Surprises; Shares Fairly Valued

Performance at wide-moat Spirax-Sarco is tracking in line with our expectations during the first four months of the year. Record order books at year-end and the expansion of manufacturing capacity have supported revenue growth significantly above global industrial production growth of 3.2%, whereas Watson-Marlow’s pharmaceutical and biotechnology sector grew over 20%. The order book across all three businesses remains at all-time highs, which we anticipate will continue to support above-industry growth. We believe rising energy prices are also a vector for growth, as customers are incentivized to optimize their energy efficiency at shorter payback periods. Guidance for the full year was maintained. We reiterate our GBX 11,800 fair value estimate and view shares as fairly valued.