Broker snap: Chemring's on the road to recovery, says Investec

24th Jan 2013 10:09

Investec has lifted its price target for defence technology group Chemring from 280p to 335p and reiterated its 'buy' rating for the stock, saying that the business is on the 'road to recovery'.The broker said that Chemring's full-year results are in line with expectations, however this "counts as a positive given the recent history". Revenues rose 2.0% to £740m, down 2.0% on an organic basis, while operating profits dropped 35% to £88.3m. Investec highlighted that the company's five-point 24-month recovery plan is now underway, which includes: simplified management structure; integration of operations; operational improvement; business development; prioritise cash.The broker said: "We make only minor positive adjustments to our forecasts, consistent with the board's guidance, given the uncertainty and early stages of the turnaround plan. "However, the results provide reassurance that group profitability can start to be recovered despite challenging end markets."Shares were up 5.84% at 299p by 10:31 on Thursday.BC