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magazineUltra Electronics has all to play for
Ultra Electronics (ULE) £20.83
Loss to date: 3.4%
Original entry point: Buy at £20.83, 11 May 2017
UK-based defence company Ultra Electronics (ULE) has announced (26 Jun) that it is in advanced talks to acquire Sparton, its partner in a major joint venture. The two companies are the sole supplier for the US Navy’s sonobuoys, used in anti-submarine warfare.
Rami Myerson, an analyst at Investec, expects Ultra’s wider underwater warfare offering that includes torpedo defence and sonars to be one of its fastest growing in the coming years. He says this is due to ‘the proliferation of submarines and increasing geopolitical tensions’.
While the deal with Sparton should help Ultra increase its share in a growing market, the limited financial details regarding the deal has meant that Myerson cannot upgrade his forecasts. However, with the US Congress finally passing the budget in May with an increased military spend, Ultra has been seeing improving order uptake in general.
Keep buying Ultra. (DS)
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