Shareholders in Cobham (COB) must have thought it couldn’t possibly get any worse when a January profits warning claimed the dividend. Five weeks on, however, the ever-struggling defence and aerospace engineer has managed to add insult to injury with yet another one at a time when patience is no better than wafer thin. In fact, with the shares down another 20%, not only have some of the long-term loyal clearly jumped from what they regard a sinking ship, but some of January’s bargain hunters have likely followed them overboard.

Today’s update suggests not only will 2016 profits miss targets, but 2017 will remain tough. To make matters worse, the key KC-46 tanker programme in conjunction with Boeing is set to cost Cobham £150m more than anticipated. And just to stick the knife in, a balance sheet review has uncovered the need for myriad exceptional non-cash goodwill and intangible impairment charges, totalling a whopping £574m, to “reset the group to a more prudent level”. Any bargain hunters today will hope that this is code for throwing the kitchen sink at the situation, clearing the decks for a fresh start free of nasties.

Back trading near 14yr lows, the shares have breached 8-month support at 130p, ignoring May lows of 125p on the way down. Off their worst levels implies fresh interest in today’s latest potential recovery trade. Good luck to them with 2 March FY results just round the corner.

Mike van Dulken, Head of Research, 16 Feb 2017