Ultra Electronics Holdings PLC (LON:ULE) shares jumped 6% on Friday as Berenberg upgraded its rating to ‘hold’ from ‘sell’ and increased its price target to 1,440p from 1,300p.
In a note to clients, analysts at the German bank said the market has now digested Ultra’s November 2017 profit warning, the departure of its CEO and termination of the planned acquisition of Sparton Corp.
READ: Ultra Electronics appoints former BBA Aviation boss, Simon Pryce as its chief executive officer
Although the UK defence contractor has failed to deliver organic growth since 2001, the analysts think that the group is well positioned to benefit from increasing defence spending - particularly in the US - as geopolitical tensions remain high.
They concluded: “We are cautiously optimistic that Ultra can deliver organic growth in the medium to long-term, driven by increasing global defence spending as well as other large multi-year contract opportunities identified by management that could bring substantial revenues over the medium to longer term.”
In late morning trading, the FTSE 250-listed firm's shares were up 5.6% to 1,420p.