Moving Into Harry's Chapter With Momentum

Research evidence excerpt

Moving Into Harry's Chapter With Momentum

UK | Aerospace & Defense Electronics

Babcock International EquityJuneResearch24, 2026

ESTIMATE CHANGEMoving Into Harry's Chapter With Momentum

BAB enters FY27F with good underlying momentum, and while greater RATING BUY

clarity around the UK Defence budget would clearly be helpful for sentiment PRICE 1,004.50p^

towards the stock, we are confident that FY27F expectations are not PRICE TARGET | % TO PT 1,400.00p | +39%

premised on an improved macro backdrop. We continue to view the 52W HIGH-LOW 1,527p - 935p

medium-/long-term pipeline as material and providing attractive secular FLOAT (%) | ADV MM (USD) 91.8% | 36.68

growth opportunities. No change to forecasts or PT. Buy. MARKET CAP £5.1B | $6.7B

TICKER BAB LN

Revenue expectations well covered: As of 1st April, Babcock had c70% of expected FY27F ^Prior trading day's closing price unless otherwise noted.

revenue under cover, and strong visibility on the shortfall, with it being filled by call off work

under the £2.8bn of existing framework agreements. Our view that Babcock is relatively

better positioned than others in the face of ongoing delays to the publication of the Defence FY (Mar) CHANGE TO JEFe JEF vs CONS

Investment Plan therefore stands. That said, timely release of the DIP is still important, with 2027 2028 2027 2028

management indicating that clarity in funding (alongside pan Whitehall approval) was a reason NA NA NA NA

for the FMSP contract seeing a 6-month bridging agreement rather than moving into the new EPS NM NM NM +3%

multiyear replacement contract, Gateway.

2027 (p) 1Half 2Half FY

EBITA margin progression continues: From an EBITA margin perspective, FY26 was a good

EPS -- -- 65.10