Liberum Capital raised their stance on defence contractor Babcock to buy from hold with an unchanged share price target of 960p.

The brokerage attributed the upgrade in share dealing to the fall in price and “attractive metrics relative to the group”. It is expected that the business should deliver 6-7% revenue growth in 2018.

Babcock recently issued a trading update for the period the 1st of October 2016 to date, highlighting the impact of Trident and other contracts to their financial outlook.

Babcock say, in addition to continuing to progress existing contracts, new order intake remained strong maintaining their order book and pipeline at £30.8 billion.

New orders received included:

A new €500 million contract for the provision and maintenance of training platforms and related service for the French Air Force (FOMEDEC).

The manufacture of 22 missile launch tube assemblies for the joint US-UK Trident nuclear submarine replacement programme. This is the first production batch of a 300 missile launch tube assembly programme.

A further six maritime equipment support contracts for the Royal Navy, including pumps, motors and electricals.

Archie Bethel, Chief Executive, said:

“Babcock continues to perform; delivering growth in revenue, profit and earnings, and maintaining healthy levels of cash generation and conversion.

The long-term visibility provided by our £20 billion order book and substantial pipeline of opportunities underpins our future growth.

Our UK markets remain positive, with the Group well positioned for the significant future outsourcing opportunities expected from both our defence and civil customers, and we see growing international demand for our specialist and complex engineering support services.”

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