Barclays starts BBA Aviation at 'overweight'

It said that operating in an attractive market with excellent market positioning, there are two potential areas for further share price upside.

The first is the Landmark acquisition, where integration is going to plan and cost synergies are marginally ahead of expectations.

Secondly, Barclays said that thanks to very strong cash generation, it sees scope for the group to deleverage quickly and expects BBA to review its target capital structure in 2017, allowing for incremental shareholder return potential over the medium term.

The bank said BBA’s Signature Flight Support business is a unique asset, with leading share in an attractive market providing aviation services for the business and general aviation market.

“A decent long-term growth profile underpinned by both cyclical and structural factors is further strengthened by BBA’s track record of growth ahead of the market, which we see as sustainable as the company begins to take advantage of network benefits from the Landmark acquisition.”

Barclays said that on an earnings basis, BBA trades more or less in line with the FTSE 250 but looks more attractive on a dividend yield basis, and offers a growth profile that is ahead of the market.

At 0857 BST, BBA shares were up 3.3% to 255.50p.