Barclays upgraded Babcock to ‘overweight’ from ‘equalweight’ on Friday, lifting the price target to 424p from 315p.
The bank said that following the FY20 restatement, £2bn impairment, accounting policy changes and forthcoming disposal proceeds to mitigate balance sheet risk, Babcock looks set to generate meaningful cash flow from 2024, “returning as an attractive income play”.
“An active M&A environment has reduced investor options for UK Aerospace & Defence exposure (Cobham, Ultra Electronics, Meggitt), and Babcock may therefore benefit from new inflows as it executes its new strategic roadmap.”
At 0925 BST, the shares were up 0.5% at 374.80p.
