| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 645.49 | -44 |
| Intrinsic value (DCF) | 808.25 | -30 |
| Graham-Dodd Method | 1.90 | -100 |
| Graham Formula | 18.06 | -98 |
Cohort plc (LSE: CHRT) is a UK-based defense and security technology company specializing in advanced electro-optical, electro-mechanical, and communications systems. Operating through subsidiaries like MASS, EID, and SEA, Cohort delivers mission-critical solutions for defense and security applications across land, maritime, and air domains. The company provides integrated C4ISTAR (Command, Control, Communications, Computers, Intelligence, Surveillance, Target Acquisition, and Reconnaissance) systems, tactical radios, electronic warfare support, cybersecurity, and training services. With a strong presence in the UK, Germany, Portugal, and select international markets, Cohort serves defense ministries, security agencies, and civil sectors like transport and energy. As a mid-tier defense contractor, Cohort combines niche technological expertise with agile project execution, positioning itself as a key supplier to NATO-aligned forces and allied governments. The company's focus on high-margin defense electronics and secure communications aligns with growing global defense budgets and increasing demand for modernization in electronic warfare and networked systems.
Cohort plc presents a specialized investment opportunity in the defense technology sector, benefiting from rising NATO defense spending and electronic warfare modernization trends. The company's £202.5M revenue and £15.3M net income (FY2024) reflect steady performance in its niche markets, supported by a robust £55.2M cash position against £40.5M debt. With a modest beta of 0.151, Cohort offers defensive characteristics but may lack scale compared to prime contractors. Key attractions include its 15.35p dividend yield and expertise in high-growth areas like naval communications and electronic warfare. Risks include reliance on UK MOD contracts (approximately 50% of revenue), potential budget cuts in European defense programs, and supply chain vulnerabilities in electronics components. The stock may appeal to investors seeking exposure to defense electronics with lower volatility than larger peers.
Cohort occupies a strategic middle position in the defense supply chain, combining systems integration capabilities with specialized electronic warfare and communications technologies. Unlike prime contractors (BAE, Leonardo), Cohort focuses on subsystem-level solutions where it can maintain technical differentiation and higher margins. The company's competitive advantage stems from three areas: 1) Naval systems expertise through SEA Ltd, providing unique sonar and submarine communications solutions; 2) Electronic warfare support services via MASS, which holds classified UK MOD contracts; and 3) Portable tactical radios through EID in Portugal, serving NATO interoperability needs. However, Cohort faces scaling limitations compared to larger defense electronics firms like Ultra Electronics or QinetiQ. Its decentralized subsidiary model provides operational flexibility but may limit cross-selling opportunities. In electronic warfare, Cohort competes with Chemring's Roke division, while in naval systems, it faces Thales UK. The company's £70M market cap places it in the 'tweener' category—too small for major platform contracts but large enough to handle complex subsystem programs. Recent success in export markets (particularly German naval contracts) demonstrates internationalization potential, though currency risks and ITAR restrictions create hurdles.