Ultra Electronics meaningfully undervalued, Investec says

The defence electronics firm's order momentum had improved in recent months after the end of Continuing Resolution in the States in May and after securing a handful of export orders, analyst Rami Myerson explained in a research note sent to clients.

He expected that trend would continue, leading to "good" momentum into fiscal year 2018.

Supported by those recent larger contract wins, the company's book-to-bill ratio was running at 1.1 times.

"This bodes well for H2 where order cover is similar to the prior year despite the CR being signed off later in the year. We are increasingly confident the group will meet full year expectations including cash (in excess of 80% conversion) and should drive a re-rating," he said.

Ultra's brief pre-close trading update revealed revenue, profits and cash in-line with expectations for fiscal year 2017 as well.

Ahead of the outfit's interims on 7 August, Myerson reiterated his 'buy' recommendation and 2,300p target price.