Cohort stock leaps on annual results beat, upbeat earnings outlook

Cohort (LON:CHRT) shares jumped 9% after the British technology group reported robust FY25 results, with revenue reaching £270 million against a £245 million consensus and adjusted EPS of 54.44p, 18% above forecasts, largely due to a lower tax charge. The company's order book significantly expanded by 19% year-on-year to £616 million, equivalent to 2.3 times annual sales and well above its long-term average, while order cover improved to 85%. Looking ahead, Cohort maintains a strong pipeline and projects approximately 10% earnings growth over the next two years, with FY26 adjusted EPS expected to exceed previous expectations due to continued tax benefits.

Analysis

Cohort (LON:CHRT) delivered a strong full-year 2025 performance, materially exceeding market expectations on both revenue and earnings per share. Revenue of £270 million surpassed the £245 million consensus, while adjusted EPS of 54.44p came in 18% ahead of forecasts. It is critical to note, however, that this EPS beat was largely attributable to a lower-than-expected tax charge, as adjusted EBIT of £27.5 million was only broadly in line with expectations. The most significant forward-looking indicator is the health of the order book, which expanded 19% year-on-year to a record £616 million. This represents 2.3 times annual sales, a substantial premium to the long-term average of 1.6x, and provides exceptional revenue visibility with 85% of FY26 revenue already covered. Looking ahead, management has maintained its sales and EBIT guidance for FY26 despite a business unit disposal, and expects adjusted EPS to outperform previous guidance due to a sustained lower tax rate, signaling confidence in achieving around 10% earnings growth over the next two years.

Key Decisions for Investors

• Investors should recognize the high quality of Cohort's forward visibility, evidenced by a record £616 million order book and 85% revenue cover for FY26, which substantially de-risks the near-term outlook.
• While the 18% EPS beat is positive, it's crucial to weigh that it was driven by a favorable tax rate rather than operational outperformance, as underlying EBIT was merely in-line with forecasts.
• Consider monitoring for potential upside catalysts such as incremental order wins, merger and acquisition activity, and execution strength, which analysts suggest could lead to further guidance upgrades beyond the current expectation of 10% earnings growth.