BofA update shows where active managers are putting money
Investing.com -- Babcock International (LON:BAB) was downgraded by Deutsche Bank (ETR:DBKGn) to “hold” from “buy” after its full-year 2025 results, sending its shares down over 2% on Friday despite strong performance and upgraded earnings guidance.
The brokerage said in a note that Babcock’s results were in line with the improved guidance issued earlier in April.
The defense contractor reported double-digit organic revenue growth and a 50 basis point increase in EBIT margins, underscoring what Deutsche Bank analyst James Beard called “strong operational performance.”
As a result of that performance, Babcock raised its medium-term EBIT margin target to 9%, up from a previous target of 8%.
Other medium-term goals, including mid-single-digit organic growth and over 80% operating cash flow conversion, remained unchanged.
The company also announced a £200 million share buyback program, which Deutsche Bank said highlights a “transformed balance sheet.”
Still, despite the positive financial developments and a 4-9% increase in Deutsche Bank’s EPS estimates for fiscal years 2026 and 2027, the analysts chose to downgrade the stock, citing valuation.
Babcock shares last closed at 1157p, above the bank’s new target price of 1115p, which was revised up from 965p.