Cobham shares rise 14% despite losses

Some rare positive news for Cobham shareholders.

The company has had a rough time of late, capping off a difficult year with the announcement of another rights issue and a sharp increase in pre-tax losses on Thursday. But at least some investors have taken heart from the new management team’s turnround plans, helping its shares to their best day of trading in more than 30 years.

Shares in the company rose as much as 15.6 per cent on Thursday, and were up 14.6 per cent shortly before the close, their biggest one-day increase on record according to Reuters data going back to 1986.

The company remained cautious with its guidance today, reiterating its warning that it may struggle to match even last year’s disappointing performance 2017, but some analysts have begun to argue that the worst may be over for the group.

Analysts at Investec upgraded their recommendation on the group to a “buy” last week, arguing that “the company has uncovered all of its major problems and the financial implications”.

Investec analysts Rami Myerson and Chris Dyett had expected a new rights issue, which will relieve immediate pressure from the management and allow them to focus on a turnround, and said the company has potential to “take advantage of a recovery in its defence end markets as well as a pickup in its commodity-related activities”.

Hedge funds Causeway Capital Management and Lancaster Investment Management have both built up stakes in Cobham in recent weeks.

Still, the shares have some way to go to recover after a period that saw Cobham issue five profit warnings in a little over a year. Even after today’s climb, they are down 46 per cent over the last 12 months, and 15 per cent in 2017 alone.