Shares in defence contractor Chemring Group PLC (LON:CHG) jumped as Barclays upgraded its rating to ‘overweight’ from ‘equal weight’.
Barclays also increased its price target to 266p, as its move to a discounted cash flow (DCF) based valuation gives more credit for medium-term improvements.
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In a note to clients, analysts at Barclays said they think that concern over the extent of end-market recovery and the level of major contract wins/losses overlooks the central tenet of the investments case: the self-help opportunity.
The analysts said: “Management is targeting 300basis point margin expansion on a like-for like basis by financial year 2022 versus financial year 2017 and we do not think this is fully in consensus.”
In morning trading, Chemring Group’s shares rose 5.2% to 231.50p.