On Tuesday, Citi updated its stance on Babcock International Group Plc (LON:BAB:LN) (OTC: BCKIF), increasing the stock's price target to GBP 6.60 from the previous GBP 6.40, while reaffirming its Buy rating. The adjustment follows the release of the company's financial results for the fiscal year 2024.
The firm acknowledged the charge related to the Type-31 frigate but pointed out that Babcock's overall performance was positive across various metrics. This performance has reinforced the belief that the management's mid-term financial projections could be on the conservative side. Citi highlighted the company's improved risk profile, noting a substantial decrease in pension deficit and a net debt-to-EBITDA ratio of less than 1.
Citi's analysis included a review of Babcock's key audit risks, noting a reduction to three in the current fiscal year, down from five in the previous year and seven the year before that. The report also revisited the provisions analysis and discussed the company's sensitivity to the costs associated with the Type-31 frigate project.
The firm's confidence in Babcock is evident as it continues to endorse a Buy rating for the stock. The new price target of GBP 6.60, up from GBP 6.40, reflects Citi's updated forecasts and the positive developments surrounding the company's financial health and risk profile.
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