5G telecoms equipment company Spirent Communications PLC (LON:SPT) has increased its full-year profits guidance after a strong finish to 2019.
Revenue in 2019 grew by 5.5% from 2018 to US$503mln while management now expects adjusted operating profit for the year just ended to be somewhere between US$91mln and US$93mln, compared to US$77.1mln in 2018.
The final quarter of the year saw the company bag several important contract wins, while the group's Networks & Security division saw particularly strong growth during the year as it benefited from the increasing demand for 400G high-speed Ethernet test solutions.
While the group enjoyed strong order growth for its Lifecycle Service Assurance solutions in the fourth quarter, delivery timing was largely for 2020, resulting in broadly flat revenue for 2019. Connected Devices, despite some revenue reduction driven by an acceleration in the decline of demand for 4G legacy products, still delivered solid operating profits.
The group ended the year with cash of US$183mln.
"We are delighted to deliver another strong year of growth and earnings improvement as further evidence that our strategy is indeed working, and we expect to exceed the market's profit expectations for the financial year 2019,” said Eric Updyke, the chief executive officer of Spirent.
“We enter the new financial year with a strong order book and we are well-positioned with leading technology to leverage more opportunities across our portfolio. Over the medium term we expect to continue to deliver mid-single-digit revenue growth with a focus on increasing recurring revenue streams to enhance the group's visibility and effective investment in our technical platforms to drive ongoing performance," he added.
Broker Liberum upped its target price to 255p from 238p on the back of Monday's update.
Shares in Spirent were up 17% at 240p in mid-morning.
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