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Babcock International - Two preferred biddder announcements due

October 2013

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • BAB
  • Price:
  • 1190p
Babcock has announced that trading has been strong and in line with expectations with all business units experiencing high activity levels. The order book has remained stable at around £12bn while 80% of anticipated revenues for this year have been contracted. In a new note broker, Jefferies, expects its £15.5bn bid pipeline could soon yield big orders with two preferred bidder announcements likely in the next two months with Network Rail (c. £0.5bn) and the BBC (£0.3-£0.4bn). Jefferies notes that consensus forecasts are predicated on 8% organic revenue growth up to 2016 but if Babcock achieves a 40% win rate on its pipeline this would support 15-20% organic growth - in other words get ready for further broker upgrades ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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