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On Friday, Berenberg analysts upgraded Chemring (LON:CHG) Group Plc stock from a Hold to a Buy rating. The analysts also raised their price target for the company to £6.70 from the previous £4.70. This decision reflects a positive outlook on the company’s future growth potential, particularly in its Energetics division.
The analysts noted the division’s promising growth prospects, driven by an expanding pipeline of opportunities. They anticipate an additional £120 million in revenue from capacity expansion in Energetics by 2030. This projection is beyond the £100 million expected from the current program, suggesting a strong growth trajectory.
Chemring Group shares are currently trading at 28 times the expected 2025 price-to-earnings ratio. The analysts highlighted that this offers a 19% compound annual growth rate in earnings per share over three years. This results in a price/earnings to growth (PEG) ratio of 1.5, which is competitive compared to European defense peers.
Berenberg’s revised price target of 670 pence reflects their confidence in Chemring Group’s growth outlook and potential.
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