Broker snap: Panmure Gordon cuts Babcock to hold

7th Jul 2011 12:21

Panmure Gordon said that with less than a 10% upside to its target price of 780p for engineering support firm Babcock, it has moved its recommendation from buy to hold.Nevertheless, the broker said that the first quarter interim management statement confirmed that trading remains in line with expectations, with the order book and bid pipeline progressing as planned.As such, Panmure is maintaining its estimates following the upgrades made after the full-year results in May. "Clearly if revenue synergies from the VT acquisition or the pace of outsourcing and corresponding contract awards come through more quickly than anticipated, this could provide some upside to our current projections," according to analysts Mike Allen and Paul Jones.However, after the recent share price strength - gaining over 25% over a six-month period - the broker downgrades the group to hold.BC