1207 Friday 30 November 2018

Babcock International, a London based defence engineering firm partnered with the MoD, has today been awarded a 10 year and £100m contract that will see them providing aerial fire fighting service for Canada. The contract which begins in April 2019, will mark the first fire fighting project that the company has undertaken outside of mainland Europe.

North American Expansion

Aerial fire fighting in North America has been prominent in the headlines in recent years, especially at the moment in California and if successful, there is no doubt that Babcock will want to expand their services across the continent. It is estimated that aerial fire fighting business in North America is worth £1.4bn in total and today’s contract allows Babcock to peruse further services that could include aerial medical services. The deal also sees Babcock oversee the maintenance of a 19 strong fleet of Canadair fire fighting aircraft for Italy.

Broker Recommendations

Since the announcement of the contract, Babcock have also been awarded with a pair of BUY recommendations from Shore Capital and Liberum Capital, with the later holding a target price of 900.00 which sits 325p above the current market price. These recommendations may come as a welcome surprise to investors holding positions with Babcock, who only two weeks ago warned of the costs that may be incurred due to the narrowing of the nuclear decommissioning business.

Babcock, who have over 34,000 employees, are down nearly 19% on the year to date, but with the new contract and potential to take the on the US market too, these broker recommendations would certainly indicate interest in this lower price.

For more details on Babcock or the defence sector in general, please contact one our brokers directly on 0121 454 0770.

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