Broker snap: Babcock could enter FTSE 100, says Peel Hunt

27th Mar 2012 11:09

Peel Hunt has maintained its positive rating for engineering support services group Babcock after an in-line pre-close trading update this morning.In its final update ahead of its full year results, the firm said the trading environment for the year had been positive and it hoped to build on its success in the coming year. Babcock said its order book had increased to around £12.5bn, after remaining stable at about £12bn for the past 18 months. Meanwhile its bid pipeline now stands at around £12bn, having risen from £10bn on January 31st 2012."With an acceleration in organic growth to come as the pipeline continues to convert, the potential for increased merger synergies and deleverage continuing at pace, in our opinion Babcock should be re-rated further," said analyst Christopher Bamberry.Peel Hunt has reiterated a buy recommendation and 855p target price for the stock.The broker says that Babcock could potentially enter the FTSE 100, being its number one stock of the Footsie reserve list. Taking this morning's 2.52% rise into account, Babcock's market capitalisation stands at £2.85bn.BC