Warming up for the second half

The half year pre-close trading update from Ultra confirmed that the company is performing as expected. The ending of the Continuing Resolution (CR) in the US appears to have eased some of the contract deferrals and, while some normalisation of the monthly outlays should be expected, the return to more standard budgetary process is welcome. This should allow Ultra to experience the stronger second half that has been flagged in previous trading updates and deliver the expected marginal improvement in earnings. The share price has eased modestly over the last quarter, leaving some headroom to our unchanged fair value of 2,257p.