MARKET TALK: BofA Merrill Resumes Babcock Intl At Underperform

26th Jul 2010 11:01

1001 GMT [Dow Jones] Bank of America Merrill Lynch resumes coverage of Babcock International (BAB.LN) at underperform with a 580p price objective. Brokerage says the underperform rating is due to the increased operational and financial risk in the business following the VT Group (VTG.LN) acquisition, the full price paid for VT, and the impact of public sector budget cuts on the ability of the group to grow organically. Brokerage says it sees this deal as circa 10% EPS accretive in the second full year due to GBP50M synergy benefits, "but there is a risk this will be mitigated by top-line and margin pressures resulting from a slowdown in the public sector." Shares -3.4% at 588p. ([email protected]) Contact us in London. +44-20-7842-9464 [email protected] (END) Dow Jones Newswires July 26, 2010 06:01 ET (10:01 GMT)