Even with the recent fall back, the FTSE 250 company has still seen its value climb by almost a third since the beginning of April, thanks in part to new contract wins, which allowed it to upgrade its full-year guidance.
In a note to clients, Barclays analysts called the 9% growth in organic revenue reported in last week's first-half results as "very strong”, and suggested management might be conservative by not upgrading its forecasts once again.
There is also scope for margins, which Barclays said were somewhat disappointing in the opening six months of the year, to pick up, given falling overheads, better purchasing power and improving “capital intensity”.
“However, we think this self-help potential as well as the current positive market outlook is now reflected in estimates and valuation,” read this morning’s research note.
“We also continue to note MGGT's lower exposure to the large jet market (~35% of revenues) vs. peers provides less potential for top-line-driven earnings growth.”
Analysts concluded: “We downgrade our rating to ‘equal weight’ (from ‘overweight’) with a 550p PT (up from 530p) & prefer Senior PLC (LON:SNR), where we see more top-line potential, and valuation and earnings aren't based on self-help.”
Meggitt shares were down 0.6% to 539.6p in mid-morning trading.