In the wake of disasters at Carillion (CLLN) and disappointments at Capita (CPI) last month, investors are especially jumpy when it comes to outsourcers. In light of this, it’s hardly surprising to see Babcock’s (BAB) share price drop sharply and then recover after it announced that revenues for the year to January 2018 would be slightly below forecasts only to quickly recover much of the fall.
IC TIP:
Buy
at
620p
The expectations miss was attributed to continued tough conditions in offshore oil and gas, as well as slowdowns in defence revenues and mobilisation of a Ministry of Defence contract. Despite this, earnings, cash conversion and, importantly, net debt are all in line with expectations, while margins are expected to beat forecasts.
