LON:CHRT

LON:CHRT - Cohort PLC

BUYAWAIT ENTRYIndustrials - Aerospace & Defense2026-08-11Data 32 days old1395.35p

Conviction

out of 100

Executive Summary

Cohort PLC is a UK-based defence and security group that supplies specialist electronics, communications, sonar, and autonomous systems to the UK Ministry of Defence, European defence ministries, and NATO-aligned customers. The group operates through four subsidiaries and holds established positions in electronic warfare, military communications, sonar and acoustic systems, and unmanned surface vehicles, with a market position that is mid-sized within the UK-listed defence cohort but disproportionately exposed to high-priority capability areas.

The investment case rests on the conversion of a record order book into sustained revenue and margin expansion, with the near-term catalyst being the half-year results due in December 2026 (the Q2 2026 results were reported on 10 December 2025 and, in line with standard UK plc cadence, the company is expected to publish its interim results for the period ending in October 2026 around December 2026); the principal risk is concentration of demand with the UK MOD, where any budgetary pressure on electronic warfare, maritime, or autonomous programmes could directly impair the top line.

BUY. Conviction Score: 66/100. The view would change to a more cautious stance on a clear deceleration in order intake, a UK MOD budget contraction that specifically touches Cohort's capability areas, or a derating of the broader UK defence peer group that overwhelms the underlying growth story.

Wait for entry. Current price 1395.35p is 23.8% above the buy ceiling of 1126.67p. New positions only below the ceiling.

AWAIT ENTRYBUY · 66/100Now 1395.35p · buy ≤ 1126.67p · trim ≥ 1480.00p

Thesis break: A confirmed UK MOD budget cut that specifically targets Cohort's capability areas, a guidance cut on the back of major contract slippage, or two consecutive reporting periods of order-intake decline would invalidate the thesis.

Business Model

Cohort generates revenue through long-cycle defence contracts, predominantly fixed-price and cost-plus engineering, integration, and through-life support programmes delivered to the UK MOD and allied governments. The subsidiaries (MASS for electronic warfare, EID for military communications, and the smaller sonar and autonomous units) typically recognise revenue over the execution period of multi-year contracts, which produces a lumpy but visible profile dominated by progress milestones rather than unit shipments. Customer mix is heavily skewed toward sovereign defence buyers, with the UK MOD representing the largest single exposure and European and NATO-aligned ministries providing the balance.

The competitive moat rests on security-cleared personnel, proprietary integration know-how, and a long track record of qualification on UK and allied platforms, which collectively raise the switching cost for defence procurers. Margin profile benefits from these barriers, with the proprietary research data indicating a recent profit expansion of 32% on disclosed revenue growth, supported by an order book of GBP 618.8m that provides near-term revenue coverage. The business model is operationally geared: as the order book converts, a higher proportion of fixed subsidiary overhead is absorbed, which is the principal mechanism for the margin expansion highlighted in the results commentary.

Financial Snapshot

Price

1395.35p

Market Cap

656.6m

P/E Ratio

27.2x

52w High

1538.00p

52w Low

881.10p

Distance from 52wH

-9.3%

Avg Volume

140853

Currency

GBX

Recent Catalysts

[10 December 2025] - Cohort published its 2026 Q2 results alongside an earnings call presentation, reporting record revenue, profit, and order book figures. Source: Seeking Alpha transcript and slide deck of the Cohort plc Q2 2026 earnings call presentation.

[12 January 2026] - Cohort issued an investor presentation confirming record revenue, a strong order book, and global demand driving a positive outlook and margin growth. Source: Quartr investor events hub (investor presentation summary).

[31 March 2026] - Cohort updated its share capital and voting rights structure, disclosing 47,006,739 ordinary shares in issue, each carrying one vote. Source: Company announcement reproduced by TipRanks.

[19 - 21 May 2026] - Cohort confirmed its participation at the Combined Naval Event 2026, showcasing naval innovations from across its subsidiaries. Source: Cohort plc corporate website news article.

Thesis Evaluation

Bull Case (33% weight)

Order intake continues to compound above 15% per annum, margins expand as the GBP 618.8m order book converts, and the UK MOD's elevated defence settlement translates into follow-on contract awards across electronic warfare, sonar, and autonomous systems. The shares re-rate toward the UK mid-cap defence peer multiple on sustained execution, with a 12-month price target of 1750p.

Base Case (51% weight)

The order book converts broadly in line with guidance, profit growth remains in the high-teens to low-twenties percent range, and the multiple holds near the current 25x reported earnings. Margin gains are steady rather than step-change, and the shares grind higher on confirmation of contract milestones, with a 12-month price target of 1480p.

Bear Case (16% weight)

UK MOD budget pressure forces a deferral or reprofile of one or more Cohort programmes, order intake slows, and the multiple compresses toward 18x as the market penalises concentration risk. The shares de-rate sharply on a guidance disappointment, with a 12-month downside target of 950p.

Weighted conviction:Bull (33%) x 100 + Base (51%) x 62 + Bear (16%) x 10 = 66/100. BUY.

Key Risks

UK MOD budget concentration: A material share of revenue is tied to UK MOD spending, so any tightening of the UK defence settlement could directly hit order intake and the conversion timetable. Estimated probability: 35%. Impact: severe.
Contract execution and milestone slippage: Long-cycle defence contracts are exposed to technical, integration, and customer-acceptance risk that can push revenue and margin recognition out of period. Estimated probability: 25%. Impact: moderate.
Valuation derating: With the shares on a reported P/E of 25.15, a rotation out of UK mid-cap defence or a broader sector derating could compress the multiple regardless of operational delivery. Estimated probability: 30%. Impact: moderate.
Liquidity and coverage: Cohort's market capitalisation sits below the largest UK defence names, which can amplify share-price swings and limit institutional ownership. Estimated probability: 40%. Impact: low.
Export and geopolitical risk: International contract awards depend on government-to-government relations and export licences, which can shift quickly with geopolitical events. Estimated probability: 20%. Impact: moderate.

Who Should Own It / Avoid It

Ideal for: long-term, UK-taxpayer-friendly investors with a multi-year horizon who want targeted exposure to UK sovereign defence capability themes (electronic warfare, maritime, autonomous systems), can tolerate a mid-cap name with lumpy contract-driven reporting, and accept concentration risk to the UK MOD in pursuit of that exposure. A minimum holding period of three to five years is appropriate to smooth contract-cycle volatility and benefit from budget-cycle tailwinds.

Avoid if: you require a high-liquidity, large-cap, diversified industrial; you cannot tolerate a single-customer concentration profile where UK MOD outcomes dominate the share price; or you need a defensive, low-volatility income stream, as Cohort's contract cadence and growth re-rating profile sit well outside that mandate.

Recommendation

BUY - 66/100. The tier reflects Cohort's record order book, disclosed double-digit profit growth, and structural alignment with UK defence priorities, balanced against meaningful UK MOD concentration risk and a P/E that already discounts a meaningful share of the growth story. The call would upgrade toward a higher confidence BUY on sustained order intake above GBP 100m per quarter and visible margin expansion across both MASS and EID. The call would downgrade to HOLD or weaker on a confirmed UK MOD budget tightening, a major contract slippage, or a sector-wide derating that compresses the multiple below 20x earnings. At the current price of 1395.35p the shares trade above our buy ceiling of 1126.67p: the thesis is credible but the price is not - new positions only below that level.

The probability-weighted value across our three scenarios is 1484.30p, 6% above the current price of 1395.35p - the market has not yet priced our probability-weighted view. Levels below are derived from the scenario targets and probabilities above, not from percentage offsets to today's price.

BUY

below 1126.67p - below this level the upside to the base-case target (1480.00p) is at least 2x the downside to the bear case (950.00p), the minimum risk/reward we require before committing new capital.

HOLD

between 1126.67p and 1480.00p - the base case is not yet fully priced, so existing holders are paid to wait, but new money gets no margin of safety in this zone.

REDUCE

above 1480.00p - at this level the base case is fully reflected in the price and anything beyond it is paying for a bull scenario we weight at 33%.

SELL

if A confirmed UK MOD budget cut that specifically targets Cohort's capability areas, a guidance cut on the back of major contract slippage, or two consecutive reporting periods of order-intake decline would invalidate the thesis, regardless of price - the bear target of 950.00p is the backstop, not an arbitrary percentage stop.

Conviction Trend

Latest conviction: 66/100. Trend versus prior report: Up.

CONVICTION BUY (80+)BUY (65 - 79)OPP BUY (50 - 64)SPEC BUY (30 - 49)AVOID (0 - 29)

Report date	Conviction
2026-08-11	66
2026-07-25	59
2026-06-28	59
2026-05-30	60
2026-04-27	59

See the trade-card view →

Sources

Market data: DYOR HQ proprietary market data workflow.

Public sentiment and news flow: Coverage drawn from public news flow, company earnings presentations, investor day materials, regulatory announcements, and analyst commentary surfaced through web research, including the Q2 2026 earnings call presentation and transcript, the January 2026 investor presentation summary, and the company's published corporate news feed.

Primary source types: Materials cited comprise company press releases and investor presentations, the Cohort plc Q2 2026 earnings call transcript and slide deck, regulatory disclosures of share capital and voting rights, the cohortplc.com corporate website, and third-party financial news wires that reproduce company announcements.

Key sources

Data correct as of 2026-08-11