Babcock International: Momentum intact, political uncertainty weighs

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Babcock International: Momentum intact, political uncertainty weighs

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Babcock International

Momentum intact, political uncertainty

weighs

Reiterate Rating: BUY | PO: 1,608 GBp | Price: 984.40 GBp

Political uncertainty drives share price decline 23 June 2026

Babcock reported FY results yesterday, in line with the pre-release from 13 May. Equity

Underlying momentum remains strong, with 8% organic revenue growth and 70bps of

operating margin expansion, combining to deliver 20% EPS growth. Nonetheless, the

Key Changesshares declined by 6%, which we attribute to the resignation of the UK Prime Minister

and the political uncertainty this creates for Babcock. Medium-term guidance of mid- (GBp) Previous Current

single-digit organic revenue growth and underlying operating margin of at least 9% 2027E Rev (£m) 5,394.9 5,488.8

across all business segments was reiterated. Babcock has strong visibility into FY’27, 2028E Rev (£m) 5,718.4 5,804.0

with around 70% of revenue under contract and sees more than 25 years of growth 2029E Rev (£m) 6,151.7 6,243.2

runway across its end markets. 2027E EPS 63.79 65.10

2028E EPS 73.72 75.87

2029E EPS 87.07 89.95Reiterate Buy. Valuation does not reflect growth

We increase our FY’27 and outer-year forecasts by c.1-2% across revenue, operating 2027E EBITDA (£m) 609.9 595.6

profit and EPS. In FY’27, we forecast organic revenue growth of 6% and our underlying 2028E EBITDA (£m) 684.9 669.5

EPS forecast of 66.2p is 2% ahead of consensus. Shares trade on 14x CY’27E P/E, which 2029E EBITDA (£m) 778.4 761.5

we believe does not reflect the mid-teens EPS growth we forecast in FY’27-29. We

reiterate our Buy rating as we see scope for a re-rating as political uncertainty in the UK Benjamin Heelan >>

Research Analyst

subsides.