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Babcock sets sail

The engineering group sealed a lucrative deal with the UK's Ministry of Defence this month
September 25, 2019

A Babcock International (BAB) trading update was the latest in a slew of encouraging announcements that have accompanied a 37 per cent share price rise since the shares bottomed out at 410p in May.

IC TIP: Hold at 558p

The engineering group revealed earlier this month that it had been chosen by the UK’s Ministry of Defence (MOD) to deliver its Type 31 general purpose frigate programme, which will provide the UK with a fleet of five ships for £1.25bn. Babcock said in a trading update covering the period since 1 April that its overall marine programme is performing well, with the Queen Elizabeth Class initiative nearing completion and Type 23 frigate life extension programme on track – it is also making progress in Australia and Canada. Babcock’s defence specific nuclear activities have increased, although the civil nuclear market remains challenging.

Peel Hunt forecasts full-year 2020 pre-tax profits of of £450m and earnings per share of 72.6p, rising to £466.8m and 75p in 2021.