STOCKS NEWS EUROPE-Meggitt rises after UBS upgrade

British aircraft parts supplier Meggitt (Other OTC: MEGGF - news) rises to outperform meagre gains on the UK's benchmark FTSE 100 index, which traders attribute to an upgrade on the company from investment bank UBS (Xetra: UB0BL6 - news) .

UBS raises its rating on Meggitt to "buy" from "neutral", helping Meggitt's shares rise by 1.3 percent to 475.60 pence in early session trading, making Meggitt one of the best-performing FTSE 100 stocks in percentage terms.

Trading volumes in Meggitt come in at around 20 percent of the stock's 3-month average daily volume - above those for the FTSE where volumes only stand at around 8 percent of the index's 3-month daily average.

UBS lowers its 12-month price target for Meggitt's shares to 520 pence from 530 pence, arguing the company could be impacted by exchange rate movements, which in turn leads UBS to lower its 2014 earnings per share (EPS) forecast on Meggitt by 1.1 percent to 38.40 pence.

However, UBS adds that Meggitt's recent share price fall - with the stock down by roughly 10 percent since the start of 2014 - has been overdone.

"We believe that Meggitt can sustain around 6 percent long term profit growth, driven mainly by the commercial aftermarket - largely planes that have already been sold - and the high growth energy sector, where Meggitt's proprietary technology gives them a performance advantage," UBS analyst Charles Armitage writes in a research note.

Earlier this month, Meggitt said it was on course to meet its guidance for the year after ironing out production problems in the United States, and it also lifted its dividend as a sign of confidence in future growth.

Reuters messaging rm://sudip.kargupta.thomsonreuters.com@reuters.net