Tuesday tips round-up: Babcock, Tesco

22nd Jul 2014 08:06

The recent slide in the share price of Babcock has been "overdone", according to the Tempus column in The Times, which recommended investors 'buy' shares of the engineer.The paper said that the group, which operates in the defence, transport and energy markets, has a healthy order book of £13.5bn despite the bid pipeline falling in the first quarter. What's more, the tone of its trading update on Monday was positive, confirming that trading is in line with expectations.However, the "shares have fallen a long way", Tempus said, which reflects the cost of the acquisition of helicopter operator Avincis which was required a £1.1bn rights issue at a large discount. "The [current] price does not reflect the quality of the company's order book," the paper said.Meanwhile, the Questor column in The Telegraph has rated Tesco a 'sell', saying that the supermarket's problem "run much deeper than the man at the top", following the resignation of Chief Executive Officer Philip Clarke on Monday.Questor said that a new CEO "changes little for the UK's largest supermarket", as it recommended investors to "steer well clear of the share for quite some time".With the UK grocery sector still suffering from falling household incomes and competition from discount chains, the paper reckons that Tesco's profits could fall even further, putting the dividend "under threat". The company could also face asset write-offs given that the out-of-town space race is now over.Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.BC