Babcock International rose to a record after the contractor helping build Britain's aircraft carriers said it's confident it will meet expectations this year as the company seeks business in a "buoyant" market.
The shares rose as much as 4.6 per cent to 965 pence in London, the highest price in 23 years.
"We are currently tracking significant defence equipment and training support opportunities which we expect to come to market and move into the bid pipeline over the next 12 to 24 months," the London- based company said in a statement today. "Babcock remains extremely well-positioned," John Lawson, an analyst at Investec, said in a note to clients.
"The long- term outlook remains very encouraging" and the stock should trade at a premium to its peers, said Mr Lawson, who raised his price target to 1,000 pence from 970 pence. Babcock, which won a contract to decommission the Dounreay nuclear reactor in Scotland, said its military and civil businesses "continue to experience buoyant market conditions."
The company said cash generation was strong and it expects to continue to pay down debt in the first half ended September 30.
The bid pipeline was £13 billion in July and the company has an order book of the same size.
The shares were up 3.9 per cent at 958 pence as of 11.29am, bringing the gain to 30 per cent this year.
The stock has been listed on the benchmark FTSE 100 Index since June.
Analysts at Panmure Gordon and Shore Capital, as well as Investec, left their earnings estimates unchanged.
"While we view this as a robust trading update and think the company is well-positioned longer term, we do believe the shares look fairly valued in the near term and require earnings upgrades from here to drive further share price progress," Mike Allen, an analyst at Panmure Gordon, said in a note.
He maintained his hold recommendation on the stock. Babcock will publish results for the six months ended September 30 on November 6.
Bloomberg