DAVY VIEW

Xaar has announced a positive FY pre-close trading update. The FY24 P&L outcome was in line with management and consensus expectations despite the challenging global ceramics market and macro uncertainty. Net cash was better than we expected, giving firepower for on-going organic investment in manufacturing efficiency and innovative product development. We are encouraged that Paul James has decided to stay on as permanent CFO; he brings some valuable experience. We see scope for significant upside to our outer year revenue growth assumptions, driven by the four new targeted end markets, although the timing of a step-up in associated printhead volumes remains difficult to predict with any accuracy. The current valuation offers a great entry point to this potential earnings upside. We reiterate our ‘Outperform’ rating and 165p price target (PT).