Bank of America reaffirms its 720p target for Melrose Industries, citing 11% revenue growth and strong engines division performance.
Bank of America has reiterated its ‘buy’ rating on Melrose Industries PLC (LSE:MRO) with a 720p price target, as the stock trades near its lowest level this year. The broker highlighted an 11% rise in group revenue and growth in adjusted operating profit across both divisions in its April trading update.
Melrose, which owns GKN Aerospace, is set to report half-year results with its shares near a 12-month low. The engines division grew 20% in Q1, driven by repairs, military work, and risk-sharing partnerships, with 18% growth expected for H1. The airframes division faces mixed demand, with defence strength offset by weaker civil markets.
The broker expects civil airframe growth to recover in H2 as Airbus ramps up deliveries. Cash generation remains a key focus for investors, though Q2 margins may have been impacted by the evacuation of a California facility in May.