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Investing.com - RBC Capital initiated coverage on Babcock International Group Plc (LON:BAB) with an Outperform rating and a price target of GBP12.00.
The research firm views Babcock as a "significantly better-quality business" following 4.5 years of turnaround efforts, noting the company’s shares trade at a 5x price-to-earnings discount compared to the broader European defense sector.
RBC Capital highlighted Babcock’s relationship with the UK Ministry of Defense, military operational asset engineering expertise, and infrastructure ownership as factors that provide high visibility for the company.
The firm expressed confidence in Babcock’s management team and execution capabilities, which it believes position the company for success on "an attractive hopper of opportunities" both in the UK and internationally.
RBC Capital’s earnings per share estimates for fiscal years 2026-2028 are approximately 3% above current guidance, which the analyst describes as "conservative," with potential for additional upside beyond this period.
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