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On Wednesday, JPMorgan increased its price target on Babcock International Group Plc (LON:BAB:LN) (OTC:BCKIF) shares to GBP11.00, up from the previous GBP10.00, while maintaining an Overweight rating. This adjustment comes after a comprehensive review of the company’s financial estimates, extending the forecast period from the fiscal year ending March 2028 to March 2031.
The revision of Babcock’s price target follows a recent teach-in event held on Tuesday, which provided insights into the company’s Cavendish Nuclear business. The business segment, accounting for 7% of group sales, has shown promising performance, leading analysts at JPMorgan to enhance Babcock’s estimated earnings per share (EPS) growth for the years ending March 2026 to March 2028 by 1%, 2%, and 4%, respectively.
JPMorgan’s analysts foresee Babcock delivering an average EPS growth of 10% over the next five years. This projection is supported by the company’s high visibility and a reduction in execution risk. In light of these factors, the firm has applied a higher target valuation multiple to the defense contractor.
The updated price target suggests a 28% potential upside over the next approximately 18 months, with the analysts’ valuation based on multiples set for December 2026. Babcock International Group’s stock is currently considered one of the most undervalued within the European Defense sector, according to JPMorgan’s coverage.
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