Investec describes Babcock's interims as 'very solid'

20th Nov 2014 12:25

Engineering support services group Babcock International's interims were "very solid", Investec analyst John Lawson wrote in a research note e-mailed to clients on Thursday.Underlying revenues sped ahead at a 10% clip, up from 9% previously, while underlying group margins, at 10.2%, remained "rock solid". Furthermore, the purchase of Avincis was likely to inflate that figure going forward.By the broker's estimates, at period end the company's order book stood at £18.5bn if one includes the Magnox contract, the acquisition of Avincis and the Marine Support Delivery Framework. That reflects the company's ability to successfully replenish its order book - an on-going challenge for any outsourcing group.Investec forecast 2015 earnings per share (EPS) of 68p and of 77.1p next year, a shade below consensus estimates for EPS of 68.3p and 79p, respectively, for each of those periods."A very robust story and we maintain our 'Buy' rating," Lawson concluded.