Babcock and Brown

Citigroup Investment Research (CIR) have initiated coverage of the Babcock and Brown (BNB) stock and have given the company a Buy, High risk rating with a 12 month share price target of $26.89. The company is part investment bank, part private equity investor and part asset manager, focused on the Real Estate, Infrastructure, Leasing and Corporate Finance sectors. The transition of the Babcock and Brown business towards a specialised fund model reduces the reliance on lumpy, individual transactions while increasing its earnings from recurrent sources.

ABN Amro have rated the Babcock and Brown (BNB) stock with a Buy rating with a share price target lifted from $23 to $24.50 and a valuation increasing from $20.85 to $22.23. The broker has suggested that the company is ahead of its timetable in terms of completing deals this year so it has lifted its EPS estimate for FY06 by 10% to $1.16. As a result the broker's target price has increased to $24.50 from $23.00, as it suggests the stock should be on a higher P/E multiple given the strong EPS growth outlook.