Citi hikes Babcock price target, reiterates 'buy' rating
Citi hiked its price target on on Monday to 1,338p from 730p and reiterated its 'buy' rating as it said growth is likely to accelerate over the next 10 years.
The bank said it was updating its our forecasts, with three main changes: 1) reaching 8% margins a year early in FY March 2026; 2) 9% margins by March 2030; and 3) accelerating growth post-2030.
Citi said it's the accelerating growth that really changes its fair value. It noted that prior to last week's Nato conference, the UK defence budget was expected to reach 2.5% in 2027 and remain at that level.
"The new commitment to grow from circa 2.5% in 2029 to 3.5% in 2035 means that we lift our medium-term growth (years 6 -10) from 3% (in line with nominal GDP) to 9%," it said.
The bank said these factors are behind the price target increase.
At 0855 BST, the shares were up 1.6% at 1,155p.
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