In a report released today, Chloe Lemaire from Jefferies maintained a Buy rating on Babcock International (BAB – Research Report), with a price target of p900.00.
Chloe Lemaire’s rating is based on several positive developments for Babcock International. The company recently secured a significant 5-year extension of its contract with the British Army, which is expected to generate £1.0 billion in revenues. This contract extension not only provides a steady revenue stream but also comes at a time when the UK Strategic Defense Review is ongoing, indicating confidence in Babcock’s capabilities.
Additionally, the new contract terms are anticipated to be more favorable than the previous ones, potentially enhancing profitability. Although the transition to the new contract in April 2025 might have a limited immediate impact on margins due to typical multi-year contract phasing, the overall outlook remains positive. These factors collectively contribute to Chloe Lemaire’s Buy rating for Babcock International’s stock.