Cobham boosted as turnaround gains pace

LONDON (Reuters) - British aerospace and defence company Cobham posted annual profit ahead of forecasts and stuck to its 2018 outlook, pushing up its shares on confidence that it was on the road to recovery after a series of setbacks.

Cobham, which is known for its air-to-air refuelling technology, has been trying to turn around its business after a string of profit warnings forced it into a rights issue in 2017.

Shares in Cobham rose as much as 18 percent to 134.4 pence on Thursday, their highest level since January, making the company the top gainer on Britain's midcap index.

"We see clear signs that Cobham is on the mend," Jefferies analyst Sandy Morris said.

Annual underlying operating profit came in at 210.3 million pounds, 6.5 percent lower than last year, but ahead of a consensus forecast of about 206 million pounds.

For 2018, Cobham said it was sticking to a previous forecast for "a range of potential outcomes", without giving further details.

The board said it was confident in the medium term, in commentary which Jefferies' Morris said had "a more encouraging tone". Jefferies has a "Buy" rating on the stock.

The company announced a deal to sell its AvComm and Wireless test businesses in February, enabling it to reduce a debt burden, and shed a part of the business acquired through the group's ill-fated Aeroflex acquisition in 2014.

"I have seen early signs of progress against our operational priorities, while risks and challenges remain. I continue to have confidence in our medium term prospects," Cobham chief executive David Lockwood said in a statement on Thursday.

(Reporting by Sarah Young)