Broker snap: Keep the faith in Chemring

18th Jan 2011 10:39

While Chemring's full-year results came in at the low end of finnCap's expectations, the broker still thinks the shares remain attractively rated in the sector and retains its positive stance on the stock.The military decoy flares and mine detection firm reported an 18% increase in turnover to £597.1m for the year ended 31 October. However, the broker recognises that Tuesday's results may disappoint some, as adjusted pre-tax profit was £116.8m against the broker's forecast of £118.5m, and net debt was slightly higher than estimates at £307.5m."While NATO countries are seeing some budget cuts, the huge US budget appears level, and Middle and Far East demand has seen a 60% increase," said analyst David Buxton."Sentiment is still being repaired following the de-rating prior to the UK Autumn budget and defence review, and we believe there is still further upside."An earnings per share growth rate of 25% appears much stronger than many in its peer group and the broker remains a 'buyer', keeping its target price at 3,800p.