Berenberg bumps up target on Ultra Electronics but says valuation 'full'
Analysts at Berenberg bumped up their target price on shares of Ultra Electronics following the comapny's latest Capital Markets Day.
Aerospace and Defence
10,798.84
16:59 23/04/24
FTSE 250
19,799.72
16:59 23/04/24
FTSE 350
4,424.29
16:59 23/04/24
FTSE All-Share
4,378.75
17:14 23/04/24
Ultra Electronics Holdings
3,500.00p
17:09 29/07/22
The broker hailed the firm's new divisional organisation and its new focus on the core Maritime and Communications and Intelligence businesses, with management having explained that Aerospace, Forensics and Energy were non-core.
Proceeds from any medium-term divestments could be used for bolt-on acquisitions or returned to shareholders as well as for organic investment requirements, it said.
"We believe Ultra is continuing on the right path, executing on a multi-year group-wide business improvement strategy under a strong new management team," Berenberg added.
The analysts also called attention to the firm's "healthy end markets" and record-high order book.
They also saw scope for above-market growth and the sale of non-core business units in the medium-term, but only limited upside to growth and margin estimates in the near-term.
And at present the valuation was "full", with the shares sporting a price-to-earnings multiple of 16.8 for a 10.0% premium against the UK aerospace and defence sector average.
On the basis of all of the above, they trimmed their estimates by 1.0-3.0%, rolled over their valuation and nudged up their target price from 2,200.0p to 2,300.0p - but stayed at 'hold'.