COHORT PLC

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Edison Investment Research Limited

Edison Investment Research Limited: Edison issues outlook on Cohort (CHRT)

13-Dec-2017 / 09:49 GMT/BST

London, UK, 13 December 2017

Edison issues outlook on Cohort (CHRT)

Cohort continues to make progress in a tough UK defence trading environment. Our earnings forecasts remain largely unchanged as performances at MASS and EID continue ahead of expectations, compensating for pressures at MCL and SEA. Our fair value calculation currently stands at 483p implying significant unrecognised potential. The recent share price fall seems unwarranted given the maintained outlook.

Cohort continues to execute well in the face of clear pressures within the UK defence sector in recent months. As such, it deserves a premium rather than the current 20% FY19e discount to the UK defence sector, comprising less resilient and profitable peers that face company-specific ratings issues. The reduction in minorities is enhancing and at our peer-based SOP value of 460p the stock would trade on 14.7x our FY19e EPS, a c 10% premium to UK defence peers. Our DCF value continues to rise, currently standing at 506p. Our fair value rises 3% to 483p (from 471p), calculated as the average of the SOP and DCF.

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