Gooch & Housego – finals show 46.8% leap in profits, strong Order Book, shares 512p, TP 680p

Mark Watson-Mitchell - 02.12.2025

This morning the £134m-capitalised photonics technology group Gooch & Housego (LON:GHH) declared its results for the year to end-September showing a stronger performance than expected performance.

The company, which is a specialist manufacturer of optical components and systems, has already given a clear guidance that the last year progressed much as anticipated.

It reported a strong financial year with revenue increasing by 10.7% to £150.5m and adjusted operating profit rising by 37.3% to £14.4m, leading to an adjusted profit before tax of £11.9m, up 46.8%.

The company's order book grew significantly by 36.2% to £142.4m, driven by strong performance in the Aerospace & Defence sector.

It is the current year and the growing Order Book that should now be interesting investors.

The Business

Gooch & Housego is a photonics technology business headquartered in Ilminster, Somerset, with operations in the USA and Europe.

It is a world leader in its field, which is the researching, designing, engineering, and manufacturing of advanced photonic systems, components, and instrumentation for applications in the Aerospace & Defence, Industrial, Life Sciences, and Scientific Research sectors.

Industrial and Telecom –

The group designs and manufactures submodules and module assemblies according to customer specifications.

It is recognised as a world-class, vertically integrated, custom-designed photonics supplier across all of its industrial applications.

Its leadership in the design and manufacture of custom optical solutions has established it as a preferred source for OEMs in industry, subsea communications, and energy.

Aerospace and Defence –

Mission-critical technology demands uncompromising precision, absolute reliability, and close partnerships with suppliers.

For more than seven decades, GHH has delivered proven optical solutions for aerospace, avionics, and defence platforms, including ruggedised commercial photonic components, build-to-print products, and full-scale development of customised solutions.

The group is recognised for the breadth of its acousto-optic, electro-optic, crystal-optic, fibre optic, and precision optic products.

Life Sciences –

As a vertically integrated supplier of optics, modules, and subassemblies, the group is uniquely positioned to support scalable manufacturing, documented quality control, and security of supply.

It also supports medical innovation through its contract design and manufacturing capabilities by partnering with leading pharmaceutical and medical device innovators to develop lifesaving diagnostic, analytical, and drug-delivery devices.

Major ‘Speed To Value’ Acquisition

In May this year, the group announced its $17.5m acquisition of the Tampa, Florida-based Global Photonics, suppliers of optical systems for military land applications, including periscopes and fire-control systems, as well as instrumentation for air platforms and other advanced precision optics.

The GP expertise in cleanroom lithography, photolithographic reticule fabrication, ion beam etching and advanced thin film coatings will complement GHH's existing manufacturing capabilities and enhance the group's offering into the North American market.

That transaction, which represents another 'speed to value' acquisition by the group, will see it supporting the Global Photonics team with wider capabilities, particularly in the areas of laser protection filtering and complex optical system design, allowing them to secure further business through their existing strong reputation and well-established relationships with US defence prime contractors.

Management Comment

With today’s results CEO Charlie Peppiatt stated that:

"I am delighted with the substantial progress the Group has made in FY2025.

Our operational performance has shown sustained improvement and resilience in the face of a complex and uncertain macroeconomic environment, with unprecedented supply chain and tariff challenges.

This is a testament to the positive progress the Group is making with the deployment of our strategy to deliver sustainable growth and to the quality of our workforce.

With our growing order book and differentiated photonics expertise aligned to markets with structural growth from megatrends, we remain confident in our ability to deliver further progress."

Analyst Views

David Buxton, at Cavendish Capital Markets, has a 680p a share Target Price accompanying his Buy note on the group.

For the year now underway to end-September 2026, he looks for £175.3m (£150.5m) revenues, £16.2m (£11.9m) profits, 45.9p (34.6p) of earnings per share, as well as the maintained 13.2p dividend.

Following today’s results, the analyst states that:

“The shares have reflected volatile sentiment in some of the company’s end markets but have not seen the sustained rerating that most defence-related stocks have seen.

Neither does this reflect the substantial operational improvements achieved.

The shares continue to trade on an attractive FY26 PE of 11.3x and an EV/EBITDA of 6.4x.

Our maintained 680p target price indicates a fair value P/E of 14.8x and an EV/EBITDA of 7.7x.

We believe our price target does not look demanding on either metric.

We see considerable upside scope for the shares and rate them a buy at these levels.”

My View

This group is trading in exactly the right growth sectors, as can be seen by its increasing Order Book.

Taking on board the Broker’s estimates, its shares at 512p have substantial upside potential, with an early break back up over the 550p level being an easy leap.

(Profile 09.12.24 @ 490p set a Target Price of 600p*)

(Profile 11.10.25 @ 586p set a new Target Price of 680p)