Level up in sight

Cohort has delivered solid profit growth in H117; this performance is expected to strengthen in the second half. The mix of profitability and reducing minorities has led us to increase our FY18 forecasts by 6% at the EPS level. The progressive dividend policy provides immediate benefit to investors, but the capital progress should also remain attractive. The shares have performed well in recent months, aided by a healthy rerating of peer defence stocks; as a result, our fair value has risen to 485p, supported by the improved cash flow valuation.