Filtronic shares jump 14% as Cavendish backs outlook after SpaceX order

Filtronic shares rose nearly 14% to an intraday high of 270p after securing a record $68.1 million SpaceX order for Cerus E-band gallium nitride solid-state power amplifiers. The contract is expected to be materially fulfilled in FY2028, providing significant revenue visibility. Cavendish reiterated its buy rating and 290p price target.

Analysis

FTC's re-rating now depends less on technology validation and more on converting a concentrated, multi-year customer commitment into profitable revenue. The key underwriting variables are milestone timing, cancellation/volume-flexibility clauses, and whether upfront inventory and capacity investment consume cash before FY28 delivery; a small supplier can show strong backlog while facing material working-capital pressure. The market should demand evidence of gross-margin retention and cash conversion in the next two reporting periods rather than capitalizing the full nominal order value today.

The second-order opportunity is qualification leverage: flight-proven E-band GaN equipment could lower procurement barriers with adjacent LEO constellation, defense SATCOM and ground-station customers. That upside is real but should not be included in base estimates until FTC identifies incremental design wins; SpaceX-specific engineering may have limited portability, and customer concentration gives the buyer substantial pricing power at renewal.

Near term, the shares may remain momentum-driven and illiquid after the sharp move. Over 1-3 months, contract disclosure, manufacturing-capacity commentary and revised FY27/FY28 cash-flow guidance are the relevant catalysts; over 6-18 months, repeat orders or a second tier-one customer would justify a durable multiple expansion. The contrarian view is that the market may be treating a future fulfillment schedule as current earnings: absent a material uplift to nearer-term revenue or margin guidance, upside from the broker target is modest relative to execution and concentration risk.

Key Decisions for Investors

• Do not chase FTC immediately after the gap-up; build only on a pullback toward 235-245p or following independently disclosed payment/milestone terms. Size as a small-cap special situation given liquidity and single-customer exposure.
• For an existing FTC long, retain a core position through the next results update but take partial profits into 285-290p unless management raises nearer-term revenue, gross-margin or operating-cash-flow guidance. A break below 220p or evidence of adverse contract repricing should invalidate the momentum thesis.
• Establish an FY27/FY28 watch item for FTC cash conversion: upgrade only if inventory, receivables and capex remain proportionate to booked production while gross margin holds. Material working-capital outflow without financing clarity is a reason to avoid despite backlog growth.
• Avoid using SPCX or CAV as read-through trades. Neither offers a clean listed economic exposure to FTC's production execution; the actionable exposure is FTC itself, with broader LEO/SATCOM names only relevant if subsequent customer diversification is announced.