Barclays stays at 'equalweight' on Ultra Electronics, says backlog growth already priced in

Analysts at Barclays stuck to their 'equalweight' recommendation for shares of Ultra Electronics, despite what they termed the defence specialist's "solid" full-year performance across 2020.

In their opinion, the shares' premium rating versus defence peers in the European Union meant that "upside" from backlog growth had already been priced in.

Furthermore, while they upped their 2022-23 earnings per share estimates by 5%, cash was expected to be subdued on account of the firm's investment activity.

Hence their stated preference for outsized EPS and free cash flow growth elsewhere in the sector, in names such BAE Systems, Qinetiq or Chemring.

Their 2,200.0p target price was unchanged as well, with the stock trading at an estimated 23% premium versus EU defence peers on 2022 EV/EBIT basis, Barclays said.

The broker also pointed out the strong performance seen in the company's Maritime end markets, a reflection of the heightened underwater threat environment.