Shares in Babcock International have come under pressure of late as the company has been lumped in with the rest of the business outsourcers. They include Interserve, which put out a shocking profit warning last week, and Capita, which has had to restate its earnings sharply downwards because of a change in accounting rules. Indeed, there are few in the sector, other than Babcock, that have not given some sort of profit warning over the past couple of years.
Another factor is the potential influence on defence spending were Jeremy Corbyn to be elected prime minister, given that Babcock gets 60 per cent of its revenues from defence, though not all from the UK. Disregard the Corbyn factor and the above seems hardly fair. Indeed,