Berenberg raises target price on Chemring

Analysts at Berenberg raised their target price on aerospace and defence group Chemring from 370.0p to 415.0p on Friday, stating demand was driving the group's order book higher.

Berenberg said Chemring was an "underappreciated re-stocking play", nothing that its AGM trading update pointed to "further high order intake" across the portfolio in response to "buoyant end-market demand" driven by rising defence budgets.

The German bank, which reiterated its 'buy' rating on the stock, noted that severe weather has caused some delays to deliveries in Q1, although it pointed out that this was not expected to affect the group's full-year result.

"Chemring is an underappreciated play on very strong ammunition demand and the year-to-date underperformance of the shares is unmerited (+3% versus UK peers +20%), in our view. We increase our price target to 415.0p, reflecting higher peer multiples," said Berenberg.

"Severe winter weather conditions have affected manufacturing operations at a number of the group's countermeasures and energetics sites. This has resulted in delays to some deliveries scheduled for Q1, although the company expects to recover from the financial impact in H2. We make no changes to our full-year estimates, although now model a greater H2 weighting to revenue and profit to reflect this. We now model a 40/60 weighting to revenue and 31/69 to EBIT in FY24."

Reporting by Iain Gilbert at Sharecast.com