In an update for the quarter to September 30 from July 1, the FTSE 250 group said trading in the period was similar to the second quarter, with 5G-led demand for its assurance solutions continuing to show strong growth, offsetting what the firm described as “some market softness” in order placement for its positioning products from US government contractors, which have been affected by coronavirus as offices and labs were closed.
Spirent added that year to date revenue growth is tracking broadly in line with its mid-single digit target.
The company said demand for its high-speed ethernet products has continued to grow as customers developed 5G infrastructure, while it also saw strong momentum and demand for its lifecycle assurance business which resulted in “good growth” in the third quarter.
For its connected devices division, the company said some customers had delayed their 5G device launches, however, it is continuing to win orders for its 5G device test solution.
“I am delighted with the ongoing determination and adaptability of all staff at Spirent ensuring our commitment to our customers. The demand for data and communications continues to strengthen as customers carefully manage through the pandemic. We have maintained good traction with our customers and we continue to benefit from the diversity of our portfolio as increased demand for our assurance solutions offset some short-term lumpiness in order placement in other areas”, chief executive Eric Updyke said in a statement.
“Overall, we are on track to show full year progress in 2020 with, as in previous years, trading performance weighted to the second half of the year and to the final quarter. Our expectations for the full year remain unchanged”, he added.
In a note on Thursday, analysts at Liberum retained their ‘buy’ rating and 320p target price on the stock, saying they believed the company is “building up a solid long term business”, with weakness in its GPS accuracy testing products for missiles and drones being compensated by the Lifecycle Service Assurance strength, both in terms of revenue growth and margins.
Shares in the company slipped 4.4% to 271.5p in early trading.