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Broker views: Engineering, mining and banking

15 March 2017 15:02

Liberum Capital has upgraded its investment rating on engineering support services company Babcock (LON:BAB) to buy from hold, due to the recent fall in the share price and attractive metrics relative to its peer group.

The broker believes the valuation is now compelling and too cheap to ignore, especially given the 6-7% expected revenue growth in 2018 and the scope to internationalise the business.

The broker added: "Issues around earnings quality, MoD pressures, pension, Avincis, and O&G exposure are now well understood. Less known, organic sales growth and free cash flow should improve in FY 2018."

Analysts have left their target price unchanged at 960p per share.

Goldman Sachs has promoted mining giant Glencore (LON:GLEN) to its buy list (previously rated as neutral), a move which it said was predicated on three main factors.

These included the company's exposure to copper/zinc (50% of estimated earnings for 2017/18) where it sees upside from spot, the marketing division provides downside protection and its expectation that some investors will rotate out of BHP/RIO into Glencore due to increasingly negative sentiment around iron-ore.

The City heavyweight increased its price target to 390p a share (from 370p).

Elsewhere, BGEO Group (LON:BGEO) was upgraded to an outright buy (from add) by analysts at brokerage firm Peel Hunt after tweaking its forecasts and lifting its target to 3,700p (from 3,450p) on the back the banking group's recent final results.

"Given the attraction of potential gains from noncore investments and the attractive earnings multiple, we move the shares to Buy," analyst Anthony Da Costa said.

At 3:02pm:

(LON:BAB) Babcock International Group PLC share price was +20.75p at 914.75p

(LON:BGEO) BGEO Group share price was +47p at 3051p

(LON:GLEN) Glencore PLC share price was +7.3p at 323.35p

Story provided by StockMarketWire.com

Related Company: BAB

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