Chemring Group - Peel Hunt sees continuing improvement

Defence contractor Chemring (LON:CHG) is ‘fundamentally’ improving and Peel Hunt expects this to continue.

Broking analyst Henry Carver reiterated his ‘add’ recommendation and kept his target price of 280p on the shares.

An update from the group confirmed that the 2020 profit before tax was at the top of the range.

The analyst went on to state that ‘This is the second year of strong cash generation in a row, and a sign of fundamental, long-term improvement....it is the cash performance that stands out for us.’

‘The business continues to fundamentally improve and we see more to come, helped by a solid demand profile for both sides of the business. We don’t believe this is adequately reflected in a price/earnings of 19x 2021.’