Broker snap: Babcock figures please

12th May 2009 13:02

Broker KBC Peel Hunt believes the recent lack of enthusiasm for Babcock International's shares is down to exaggerated fears about public sector spending.The broker believes the recent share price underperformance is unwarranted and has upgraded the stock to 'buy' from 'hold', with a price target of 550p.'We believe that the current valuation offers upside not least given the secure earnings streams and modest scope for FY 2010 upgrades arising from the momentum in Marine Services,' said KBC analyst Andrew Nussey.'Furthermore, the steps taken to reduce the P&L [profit & loss] volatility arising from the pension schemes has improved the underlying quality of earnings,' Nussey added.Singer Capital Markets, meanwhile, has a price target of 570p and is retaining its 'buy' recommendation after Babcock's profits came in 2% of the broker's forecasts.'Our FY'10E projections are likely to remain unchanged but bottom of the range forecasts could edge up,' predicted Singer analyst Kean Marden.