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On Thursday, Jefferies analyst David Farrell adjusted the price target for QinetiQ Group (QQ:LN) (OTC: QNTQY), increasing it to GBP5.20 from the previous GBP4.60, while reiterating a Hold rating on the stock. The revision reflects potential growth opportunities identified within the company’s operations, particularly in Europe and through its involvement with NATO.
Europe’s contribution to QinetiQ’s first half of 2025 revenue stood at 4%, with the company’s Aerial Training Services business in Germany pinpointed as a prime candidate for growth due to increased defense spending. The analyst anticipates that QinetiQ could see additional benefits as European nations, including Spain and Germany, utilize the Long-Term Partnering Agreement (LTPA) Test & Evaluation services offered in the UK. These services were employed by the Spanish and German Air Forces during the first half of 2025 under a new contract with the NATO Support & Procurement Agency.
Farrell’s commentary suggests a potential shift in QinetiQ’s strategic focus. The company, which has emphasized the AUKUS (Australia, UK, US) narrative in recent years, may pivot towards exploring more opportunities with NATO non-US members. This strategic adjustment could unlock further revenue streams for QinetiQ, as European defense initiatives evolve.
The analyst’s price target increase reflects a positive outlook on QinetiQ’s ability to capitalize on these developments. The hold rating indicates a view that while the stock may have potential, it is currently fairly valued based on available information.
Investors will be watching closely to see how QinetiQ leverages its NATO relationships and whether these moves will have the expected positive impact on the company’s growth and revenue in the future.
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