Victoria shares: new forecasts from bullish analyst
After directors spent heavily on shares in their own business, the value of the company quadrupled. Now, an analyst has explained why it’s just upgraded the stock for the first time in ages.
16th January 2025 13:26
by Lee Wild from interactive investor
Among the most popular UK stocks to buy on the ii platform you’ll find mostly FTSE 100 companies, many of them with attractive dividend yields or investment potential. But every now and then there’s a gatecrasher. Currently, this exclusive club has been joined by a small Worcester-based flooring company.
Victoria (LSE:VCP), now a £130 million business and listed on the AIM market, first attracted share buyers in numbers from the middle of December, just after they sank to their lowest price in over 10 years. But interest has picked up pace since the start of 2025.
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On 10 December, we heard that chief executive Philippe Hamers had spent £80,000 on 200,000 Victoria shares at 40p each. He now owns 461,648 of them. Then on New Year’s Eve, non-executive director Gavin Petken spent more than £170,000 on 255,099 shares at an average price of 69p. These have proved to be great trades.
A day before Victoria’s third-quarter update on 8 January, the share price had been as high as 132p. The company said trends highlighted at November’s interim results had not changed – subdued consumer demand but stronger second half – and that results for the year to March 2025 would meet consensus estimates. Analysts pencilled in revenue of £1.163 billion and underlying operating profit (EBITDA) of £90 million.
Source: TradingView. Past performance is not a guide to future performance.
But things should progress from here. Improving productivity and growing market share should boost earnings by £32 million in the year to March 2026, and cumulative cost savings targeted by the end of the following financial year should exceed £80 million.
Management predicts that as demand normalises, and with higher operational leverage than before, mid-high teen EBITDA margins are achievable. “Self-help” initiatives and uptick in housing transactions “now underpins the board's view of improved financial performance in the forthcoming two years”.
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At the start of this week, the shares peaked at 151p before drifting lower. Now, nominated adviser and joint house broker Singer Capital Markets has repeated its “buy” rating and upgraded both sales and profit forecasts for the first time in well over a year.
Analysts there now expect sales of £1.254 billion in the year to March 2026, a 5.5% increase on the previous forecast, and £1.324 billion the year after, up 7.3%. EBITDA forecasts remain at £137.4 million for 2026 but rise by 7.9% for 2027 to £168.5 million. In two years’ time, EBITDA margin is tipped to have risen from 7.9% to 12.7%.
“From our conversations with management, we detect increased confidence in the scale and speed at which these savings can be achieved,” said Singer in its research note.
“Demand for European flooring is circa 20% below pre-pandemic peaks, so there is still plenty of recovery potential and management has regularly outperformed its own expectations on cost savings which bodes well.
“Our target price increases to 175p (circa 7.5x Mar26e enterprise value/EBITDA) with scope for a re-rating as confidence in forecasts and deleveraging builds (average multiple circa 10x last 10 years).”
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