Charles Stanley upgrades Meggitt, says valuation looks "more realistic"

4th Aug 2015 15:18

(ShareCast News) - Charles Stanley upgraded Meggitt to 'accumulate' from 'hold', citing recent share price weakness."Following share price underperformance year-to-date, the valuation looks more realistic and Meggitt offers an above sector average dividend yield supported by improving free cash flow," analysts said in a note on Tuesday.The brokerage noted that Meggitt's share price was down 8.2% over the last year, having lost 12.3% in the last three months.Analysts said the company's first-half results were slightly ahead of expectations and organic sales growth of 3% reflect good growth in the civil aerospace division and a better-than-expected performance in its military arm, partially offset by ongoing challenges in the energy market."Reassuringly, Meggitt remains on course to achieve low to mid-single digit organic sales growth in 2015," said Charles Stanley.It said that although Meggitt continues to face near-term headwinds, investors are likely to be relieved that the group remains on track to deliver full-year guidance, underpinned by the benefits of self-help initiatives, a supportive share buyback programme and early signs of a stabilisation in defence budgets.At 1431 BST, Meggitt shares were up 5.9% at 491.50p.