- Babcock International Group
- 25 April 2025 11:15:23
Source: Sharecast
Berenberg said momentum at Babcock was building following a strong performance in FY25, with the company making "good progress" towards its medium-term guidance and taking "major steps" to de-risk its long-standing pension deficit over the past 12 months.
The German bank noted that this coincided with the company further strengthening its balance sheet, with leverage now "comfortably below medium-term guidance".
"The favourable outlook for defence markets in the UK and Europe supports sustained growth over the mid-term, in our view," said Berenberg, which reiterated its 'buy' rating on the stock.
"We move our FY25 estimates in line with the preliminary result and raise our FY26 EPS estimate by 3%. We model 30bp of underlying operating profit margin expansion in FY26 versus the adjusted underlying margin of 7.4% in FY25, after accounting for the circa £5.0m one-off benefit in Marine. In FY27, we forecast further margin expansion to 8.1%, versus medium-term guidance of at least 8%, and 75% underlying operating cash conversion to EBIT, versus medium-term guidance of at least 80%."
Reporting by Iain Gilbert at Sharecast.com