Broker snap: Strong pipeline at Babcock

17th May 2011 12:32

With an accelerating pipeline, engineering support services group Babcock International has had its target price raised by Peel Hunt, who says the share remain a 'conviction buy'."While FY2011 [fiscal year-ended 2011] profit before tax was 2% ahead of our expectations and debt 2% lower, the highlight in our opinion was the further increase in the pipeline (up 70% since November 2010)," according to analyst Christopher Bamberry.The broker increases FY2012 estimated earnings per share by 3% to 60.6p. As a consequence, the target price is hiked to 735p, from 675p previously."We believe that the risk to our forecasts (from FY2013) lies on the upside, as the hiatus in public sector expenditure comes to an end and the acceleration in the pipeline feeds through into contract wins thereby accelerating the organic growth rate," said Bamberry.---BC