Highlights

  • JPMorgan expects Babcock to update medium-term guidance in June 25 earnings release
  • Bank sees potential benefit from UK Strategic Defence Review (SDR) opportunities
  • FY25–FY27 EPS estimates 5–7% above consensus; stock rated as one of cheapest in sector

JPMorgan Cazenove placed Babcock International Group Plc (LSE: BAB) shares on a "positive catalyst watch" ahead of the company’s full-year results announcement on 25 June 2025. The bank highlighted a potential shift in guidance and the likelihood of Babcock outlining opportunities from the recently published UK Strategic Defence Review (SDR).

According to JPMorgan, the SDR, released on Monday, could position Babcock as one of the significant beneficiaries due to its involvement in UK defence and nuclear services. The investment bank expects the company’s upcoming earnings call to shed light on specific opportunities resulting from the review.

JPMorgan projects that Babcock could introduce new medium-term financial guidance, marking a turning point in its financial strategy. The bank’s price target of 1,280p by December 2026 suggests a 25% upside from current levels, driven by multiple-based valuation models.

In terms of earnings forecasts, JPMorgan's estimates for earnings per share (EPS) for fiscal years ending March 2025 to 2027 are 7%, 6%, and 5% above the Vuma consensus, respectively. The bank continues to rate Babcock as overweight and describes it as one of the least expensive European defence stocks under its coverage.

JPMorgan’s note does not guarantee future performance but indicates that the combination of improved guidance and potential SDR-related contracts could be key catalysts to monitor during the upcoming results. Investors are expected to watch the 25 June earnings closely for any updates that may affect forward-looking projections.