Market's view on Babcock
Published on April 2024
- The UK is set to increase defence spending to 2.5% of GDP, which will provide significant extra funding.
- The US has approved a $61 billion arms package for Ukraine, which is seen as positive for defense stocks.
- There is a current trend of profit-taking in all defense stocks, but it is expected that long-term buyers will enter the market due to increased global re-arming needs.
- The defense sector is experiencing an overall downturn, with speculation about Putin’s status influencing the market.
- A notable drop in BA shares by 4% is identified, suggesting its impact on sector sentiment.
- There is a projection that stock prices might back-test 500p but are expected to rebound due to multi-year demand for re-arming and political criticisms of current governmental approaches in the UK and Europe.
- A lack of additional funding for defence in the recent budget is heavily criticized in light of current global tensions.
- A significant contract win for HMS Victorious is expected to have a positive opening impact on related stocks.