Citi downgrades Meggitt, says further upside limited

Citi downgraded aerospace engineer Meggitt to ‘neutral’ from ‘buy’ on Thursday after the share priced surged this week on the back of positive news about a Covid-19 vaccine being developed by Pfizer and BioNTech.

The bank, which has a 430p price target on Meggitt, said further upside is now limited.

"We maintain our recovery forecast of Meggitt’s civil aftermarket revenues getting back to 2019 levels by 2023, with business jets recovering first and wide bodies recovering last," it said.

"Based on this, we are 12-13% above 2022 and 2023 EBIT consensus estimates from our stronger margin recovery forecast."

Citi said that although consensus EBIT will need to come up, recommendation upgrades are likely more limited.

"We open a negative 30- day catalyst watch as we believe the shares will settle lower as the dust settles," it said.

At 1450 GMT, the shares were down 5.2% at 363.30p.