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Shareholders in struggling defence and aerospace engineer Cobham (COB) are fuming this morning, back in familiar territory at the bottom of the after yet another profits warning. This latest has sent shares back to lows of late October (only marginally higher than June’s lowest in 11yr) when management last disappointed.
Worse still, this one has proved the nail in the coffin for the final dividend, perhaps the one thing that had kept the loyal from jumping ship. After all, a run of profits misses, a controversial rights issue and full C-suite clear-out linked to expensive M&A and challenging trading conditions would try the patience of a saint, the shares down as much as 55% from their Feb 2015 peak.
Today’s gap down from 165p to 130p is a near carbon copy of what happened in October, undoing all the hard work that a Trump-inspired rally, fresh start with new management and traditional year-end gains did to get the shares back above 160p and their major moving averages (50, 100 and 200-day). While a bounce from 130p may well strengthen the floor for the shares, it likely also reinforces the ceiling at 175p. Those still on board may just have to wait it out a bit longer. Again.
Mike van Dulken, Head of Research, 11 Jan
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