Broker snap: US provides turbulence for BBA, says Charles Stanley

11th Aug 2011 11:27

Charles Stanley has highlighted some short-term turbulence at BBA Aviation following the recent share price decline, but has kept its buy rating on the aviation support and aftermarkets services provider expecting long-term structural growth."Given the downgrade to US [gross domestic product] growth forecasts, there may be some short term volatility in US business jet usage. However the price has fallen by c. 23% since the beginning of July which we believe encompasses any potential short term weakness in demand," said analyst Peter Ashworth and Siral Shah. "We view this as an opportunity to buy shares in a sector expected to grow by 4-6% [per annum] over the next decade and has attractive consolidation opportunities," they said.While the broker has marginally raised its pre-tax profit forecast for the current year from £105.4m to £106.1m, the 2012 estimate is cut by 2.4% from £118m to £115.2m given the "current market conditions".The target price is cut from 250p to 230p due to the uncertainty in the US economy.Shares edged 0.71% lower to 168.80p at 11.27am on Thursday.BC