Broker snap: Investec upgrades Meggitt to 'buy'

20th Aug 2013 10:52

Meggitt, the engineering group working in the aerospace, defence and energy markets, was making gains on Tuesday morning after Investec upgraded the stock from 'add' to 'buy', saying it still sees further upside even after a strong performance this year.The target price for the shares was lifted from 535p to 600p given the stock's impressive near-40% rise so far in 2013.Analyst Chris Dyett said: "For a number of years now civil aerospace stocks have been market favourites given the long term visibility and growth prospects. However, we favour Meggitt for its subtle improvements, which we still think are under-estimated and under-valued."The company's interim results on August 6th more or less met forecasts across the board, Dyett explained, and highlighted an acceleration of civil aftermarket volumes during the second quarter which has helped to underpin full-year estimates."Meggitt has demonstrably improved its market positions (see recent contracts) and operational performance (not just about profit enhancement, also greater customer engagement) but this is yet to be fully factored into the rating."Dyett said that if Meggitt can continue to do what it already has been doing - "improving its mix, market positions and operational footprint and responsiveness" - the shares should have further to go.The stock was up 0.38% at 534.5p by 10:59 on Tuesday.BC