The share price of FTSE 250-listed Babcock International Group PLC (GB:BAB) gained 3.09% yesterday after Bank of America (BofA) assigned a Buy rating, predicting a 48% upside. The bank holds a positive outlook on the stock, citing its effective turnaround strategies that have begun yielding favorable results. The established price target is 585p compared with the current trading level of 394.2p.
The stock has been on the rise since the company released its FY23 earnings, which exceeded forecasts. Over the past three months, the Babcock share price has recorded a 27% increase in trading.
Babcock International is a global company specializing in providing engineering, support, and vital systems to both defence and civilian markets.
Positive Outlook from Analysts
Analysts are bullish on the stock based mainly on the company’s turnaround strategy unveiled by its new leadership team in 2021. The company is making huge progress in this direction, which was evident in its annual results for FY23. Analysts were pleased about the company’s revenue growth, contract backlog, and revival of dividends in FY24.
Analysts at BofA expect a growth of 140 bps (basis points) in the company’s margin over the next three years, which could drive improved free cash flow. This would further promote higher shareholder returns starting in 2024. Additionally, BofA forecasts that the company’s revenues from defence markets could increase to 80% in FY26 compared to 61% in FY23.
Before this, last month, Chloe Lemaire from Jefferies also confirmed her Buy rating on the stock, suggesting an upside of 30% in the share price.
Is Babcock a Good Share to Buy?
As per the consensus rating on TipRanks, BAB stock received a Moderate Buy rating supported by a total of seven recommendations, including five Buy and two Hold ratings. The Babcock share price forecast is 496.7p, signifying a potential upside of 27% from the current level.
