FY26 Results As Guided; FY27F Expectations Well Covered

研报英文原文证据摘录

FY26 Results As Guided; FY27F Expectations Well Covered

UK | Aerospace & Defense Electronics

Babcock International EquityJuneResearch22, 2026

FLASH NOTEFY26 Results As Guided; FY27F Expectations

RATING BUYWell Covered

PRICE 1,046.00p^

FY26 results are consistent with the May trading update, with FY27F

revenue cover in line with the prior year at c70%, with the delta to come PRICE TARGET | % TO PT 1,400.00p | +34%

from call-offs under framework agreements. BAB has good operational 52W HIGH-LOW 1,527p - 935p

momentum, and there is more to go for over the coming years as FLOAT (%) | ADV MM (USD) 91.8% | 37.73

mgmnt trade off growth with operational efficiencies. Significant multi-year MARKET CAP £5.3B | $7.0B

opportunities continue to present upside risk to medium-term growth rates TICKER BAB LN ^Prior trading day's closing price unless otherwise

in our view. Buy. noted.

Investment view: Babcock made good operational progress through FY26, as evidenced

by an improvement in EBITA margins of 70bps, with expansion across all four divisions,

and an EBITA figure which, pre Type 31 charges, ended the year 11% higher than market

consensus 12 months ago. Importantly, we continue to believe that there are still a number

of levers that the group can pull to improve this operational performance, both in FY27F and

beyond, which will create shareholder value. Management expectations for FY27F may again

prove conservative, especially given the helping hand from the 2 Indonesian AH140 licenses,

however, we understand the reluctance not to be too aggressive early in the year, especially

given the MOD backdrop. That said, we are confident, with 70% of FY27F revenue expectations

under contract, and the delta largely coming from call-offs under framework agreements, there