Broker snap: BBA Aviation placing presents buying opportunity

7th Mar 2011 10:29

UBS upgrades aviation services provider BBA Aviation after a strong 2010 and a share placing which signals a return to expansionary activity.While 2010 saw market volumes in business jet activity increase 10%, the broker expects growth to slow due to tougher comparatives, but still predicts BBA's organic growth to accelerate to 6% as its Aftermarket division benefits from a full year of positive growth.Following the legacy fuel systems acquisition announced last week, the £86m share placing should leave around £36m of excess funds to finance their acquisition pipeline, a further catalyst for the stock, according to UBS.Due to the 4% earnings dilution of the share placing, the broker lowers earnings per share estimates and, in turn, its target price, from 240p to 230p. However, "with the shares having fallen due to the share placing we view this as a buying opportunity and upgrade out rating to 'buy' [from 'neutral']."