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Congratulation on you day killing following the drop in the share price you are with out doubt a seasoned investor. There are a lot of small investors here that are nursing significant losses and what they least need is there noses rubbed in it through conceit . For me a more suiting pseudonym for you would be KNOB or better still LARGEKNOB.
(Sharecast News) - Babcock International was under pressure on Monday after RBC Capital Markets cut its stance on the engineer to 'sector perform' from 'outperform' with 'speculative risk' and slashed the price target to 700p from 1,000p.
The bank said that while a market-leading position, high barriers to entry and a long-dated order book should make the company an interesting investment proposition, it's telling that there's limited buying interest even on a CY19 price-to-earnings ratio of 8x.
"In our view, until we see both the board and outlook 'refreshed', it is difficult to envisage relative outperformance," RBC said.
The bank said that its positive stance was based on the strength of the group's relationship with the UK Ministry of Defence, the non-discretionary bias of the work it undertakes and the fact that these were not reflected in its rating.
"However, persistent 'financial discipline' concerns and negative earnings surprises have ensured that the stock de-rating has continued. Putting this into perspective, Babcock has now underperformed the FTSE All Share 50% over the past five years - despite an 11% compound annual growth in operating profits. On this basis, surely something has to give?" it said.
RBC said the stock's low valuation appears to reflect worries that the issues that have beset the likes of Capita, Carillion, Mitie and Serco - growth, accounting and balance sheet - are about to emerge at Babcock.