Meggitt (MGGT) Ordinary 5p Shares
HL comment (5 November 2014)
Read more share research from Hargreaves Lansdown
- Total reported revenue in the third quarter fell 2%, with the organic growth being more than offset by the net adverse impact of foreign exchange translations, acquisitions and disposals.
- A £250 million share buyback programme was announced, taking advantage of the group's strong balance sheet and limited acquisition opportunities.
- In today's announcement, Meggitt cautioned that revenue growth would "moderate" in the final quarter. In August the company cut its 2014 full-year expectations for organic revenue growth to low single digit percent from mid-single digits, citing bigger than expected declines in US military spending and challenges in its energy business.
- Currency movements provide potential to generate major headwinds. The risks principally relate to US dollar/Sterling exposure.
- The civil aerospace industry has historically proved volatile. Major customers such as Boeing and Airbus are dependent on the highly competitive and cyclical airline industry.
- Failure to react to fundamental changes in the civil and military aftermarket would impact.
- Meggitt has relied on acquisitions to drive growth. This strategy carries with it the risks of overpaying for acquisitions or failing to integrate acquired companies which could impact on shareholder value.
- Investors reacted positively to the share buyback programme with Meggitt's share price rising over 6% in mid-morning trade, the second highest riser on the FTSE100 index.
- The group previously launched Meggitt Production System (MPS), its single global approach to continuous improvement at 16 of its sites in 2013, with a further 16 scheduled for 2014 and the remainder in 2015, with significant operational improvements already in evidence.
- In August, within its Civil Aerospace division, Meggitt announced notable contract wins including full ATA26 fire protection and control systems on Boeing's newest family of single-aisle aircraft, the Boeing 737MAX, wheels and brakes on the recently launched Dassault Falcon 8X business jet and condition monitoring equipment on a new, as yet undisclosed, aero engine.
- The financial position of the group remains "very strong".
Register to receive Meggitt share research updates direct to your inbox for free
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.
The London Stock Exchange does not disclose whether a trade is a buy or a sell so this data is estimated based on the trade price received and the LSE-quoted mid-price at the point the trade is placed. It should only be considered an indication and not a recommendation.
Trades priced above the mid-price at the time the trade is placed are labelled as a buy; those priced below the mid-price are sells; and those priced close to the mid-price or declared late are labelled 'N/A'.