Stock Market News
JP Morgan downgrades Ultra Electronics to 'neutral'
JP Morgan has downgraded Ultra Electronics to 'neutral', citing a reduced outlook for 2018 earnings and increased competition for providing sonobuoys to the US Navy.
Ultra's 2017 results, posted a day earlier, were in line with expectations but there was "a lot of info to digest", the JP Morgan analysts said.
Earnings for 2018 are likely to be about 6% lower than JP Morgan's forecast due to an accounting change, currency fluctuations and higher research costs. Ultra also said its acquisition of US rival Sparton was blocked on competition grounds.
Ultra and Sparton have a joint venture that sells sonobuoys to the US Navy. The US Department of Justice has announced an investigation into the joint venture and the navy has said it wants more competition for its purchases of sonobuoys.
Sonobuoys make up about 15% of Ultra's group sales and the US Navy contract is a core part of the company's business, the analysts said.
Ultra also announced a £134m share buyback to return to investors money raised in 2017 for the scrapped Sparton deal but the timing is unclear, JP Morgan said.
The analysts reduced their December 2018 price target for Ultra's shares to 1,535p from 1,675p, reflecting lower earnings and a slightly lower target multiple due to the prospect of increased competition to sell the US Navy sonobuoys.
"Given our lower price target, and the rally in the shares from recent lows, we downgrade to 'neutral' from 'overweight', the analysts said.
Ultra's 2017 results, posted a day earlier, were in line with expectations but there was "a lot of info to digest", the JP Morgan analysts said.
Earnings for 2018 are likely to be about 6% lower than JP Morgan's forecast due to an accounting change, currency fluctuations and higher research costs. Ultra also said its acquisition of US rival Sparton was blocked on competition grounds.
Ultra and Sparton have a joint venture that sells sonobuoys to the US Navy. The US Department of Justice has announced an investigation into the joint venture and the navy has said it wants more competition for its purchases of sonobuoys.
Sonobuoys make up about 15% of Ultra's group sales and the US Navy contract is a core part of the company's business, the analysts said.
Ultra also announced a £134m share buyback to return to investors money raised in 2017 for the scrapped Sparton deal but the timing is unclear, JP Morgan said.
The analysts reduced their December 2018 price target for Ultra's shares to 1,535p from 1,675p, reflecting lower earnings and a slightly lower target multiple due to the prospect of increased competition to sell the US Navy sonobuoys.
"Given our lower price target, and the rally in the shares from recent lows, we downgrade to 'neutral' from 'overweight', the analysts said.
Related share prices |
---|
Ultra Electronics Holdings (ULE) share price |
Stock News headlines are gathered from financial news sources around the web. Views and opinions on each item are from their respective authors and website. They are not opinions of LiveCharts.co.uk
Get a free widget for your website with our latest headlines.
You can now add our live prices and new headlines to your website.The news widget features quotes for Oil prices, spot Gold price and Indices plus a choice of news channel for healines.
Top Shares pages
- Share price quotes
- Share charts
- Share watch list
- Company Results Calendar
- Top Large UK Shares
- UK Market Sectors
- Stock market news
- Company news
- Share tips
- A-Z company search
More share features
POPULAR Share Prices
- Royal Mail share price
- Lloyds share price
- HSBC share price
- Barclays share price
- Prudential share price
- Santander share price
- NEXT share price
- Diageo share price
- BP share price
- Vodafone share price
- British Airways
- Centrica share price
- Tesco share price
- Taylor Wimpey Share Price
- National Grid
- GKP Share Price
- Marks and Spencer
- Rolls Royce
- Rio Tinto
- THG Share Price
- Aviva Share Price
- Boil Share price
- Easyjet Share Price
- Genedrive Share Price
- SSE Share Price
- IAG Share Price
- Boohoo share price
- HE1 share price
- AVCT share price
- BOOM share price