Babcock earnings preview

Tuesday, 23rd May 2017 14:53 - by Rajan Dhall

Babcock report tomorrow and have a great run this year, since mid April we have seen a move of 12.6%. 

The company provides engineering support services and offers support to the defense, energy, emergency services, transport and education sectors. Its segments include Marine and Technology, Defence and Security, Support Services and International and just recently won a contract to provide support services to Royal Navy warships over seven years worth £360M.

Recently brokers and institutions have been upgrading the company with Liberum Capital reaffirming a “buy” rating and issued a 960p price target which we have since eclipsed and In a positive note Deutsche Bank said the shares could rebound if the company reports solid results.

Looking at the technicals, I have noted the levels surrounding the earnings release. The most encouraging thing for the stock is the breakout of the lower consolidation, forming a higher low and a higher high after a long downtrend. The 1000p level is the main level in focus for this stock but it would take something special to get there. If results are not great, the 950p are could be the the first support and then 915p underneath. The value area is way under the current price at the 900 level, this is where the most amount of contracts have been traded recently but I believe if results are good we could see a new value area higher up at the 1000p area in the coming months.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.