Morgan Stanley has initiated coverage on Babcock International Group PLC (LON:BAB) with an ‘equal-weight’ rating and a target price of 290p.
In morning trade on Tuesday, the FTSE 250-listed defence engineering group’s shares were changing hands at 272.60p each, down 2.2% on Tuesday’s close.
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In a note to clients, the US investment bank’s analysts said: “Babcock shares sit in the perceived value camp. End markets still offer growth.
“However, the outlook is uncertain, rising one-offs make P&L valuations less relevant and cash conversion is declining.
“In addition, top management changes add another layer of complexity.”