Brokers' view: Panmure Gordon

The tag team of Graham Jones and Damian McNeela see merit in Associated British Foods, the company behind budget retailer Primark. 

After a strong set of full-year results, in which the group reported a one per cent rise in pre-tax profits to £835 million, they note that Primark itself invested £314 million over the year, built 19 new stores and grew like-for-like sales by 3 per cent.

Meanwhile, its sugar division was said to have produced a ‘very strong performance’ in which profits grew by 31 per cent to £315 million, with total production of 3.9 million tonnes reported. They note that, with sugar prices remaining high and EU stocks expected to remain low, the EU price outlook for 2012 is ‘positive’. Identifying a target price of £12.00, pre-tax profits of £975 million are forecast for 2013.

Allen loves Babcock
Mike Allen, together with Paul Jones and Andrew Thomas, waxed lyrical on engineering concern Babcock International Group. 

Having unveiled a solid set of first-half results, the analysts maintain that the stock has been ‘the best performer in its universe’, adding that ‘pressure will grow to convert the pipeline’. 

Identifying a target price of 780p, EPS of 59.79p are pencilled in for the year to March 2012.