David Farrell, an analyst from Jefferies, maintained the Buy rating on Babcock International. The associated price target remains the same with p1,670.00.
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David Farrell has given his Buy rating due to a combination of factors, emphasizing that Babcock’s latest annual performance showed solid underlying momentum, with revenue, EBITA, and free cash flow all exceeding market expectations. While he acknowledges that the new £140m charge on the Type 31 contract is substantial and likely to weigh on sentiment, he views it as tied to the company’s last major legacy project rather than a sign of broader operational weakness.
Farrell also highlights that Babcock now has a much stronger balance sheet, which allows it to absorb these charges while still launching a £200m share repurchase program, underscoring management’s confidence in future cash generation. In his view, the company’s improved financial resilience, combined with a well-supported FY27 EBITA outlook and shareholder-friendly capital allocation, justifies maintaining a Buy rating and an unchanged price target of £16.70 per share.