Meggitt upgraded to buy on aerospace growth drivers

Meggitt has been upgraded by Berenberg from ‘hold’ to ‘buy’, saying the company is well positioned to benefit from strong growth drivers in its civil aerospace markets.

It comes after the FTSE 100 company, which is due to join the FTSE 250 next week, issued a profit warning in October and last week confirmed full-year guidance and provided an outlook for 2016.

Berenberg said on Tuesday that they’ve learned more about actions being undertaken to address the company’s current headwinds.

“We were reassured that business fundamentals have not changed materially and that downside risks are being mitigated.”

Berenberg also noted that management and directors have bought shares worth nearly £1m since the profit warning, and that the company has also reiterated its commitment to a progressive dividend policy.

With the shares looking attractive against peers, it upgraded the stock but also revised its target price down from 536p to 445p.

Meggitt shares surged on the news, up 9.9p (2.8%) to 363.2p at 0938 GMT.