Gold prices bounce off 3-week lows; demand likely longer term
On Monday, RBC Capital Markets initiated coverage on QinetiQ Group (QQ:LN) (OTC: QNTQY), a company specializing in defense services, with a "Sector Perform" rating and a price target of GBP4.50. The firm highlighted QinetiQ’s distinct position in the market, noting its deep engineering and research and development expertise, as well as its longstanding and trusted relationship with the UK Ministry of Defence (MOD). The company, currently valued at $2.83 billion, has demonstrated solid operational performance with a perfect Piotroski Score of 9, according to InvestingPro data.
QinetiQ has historically exceeded the growth of the UK defence budget, with recent revenue growth of 10.36% in the last twelve months. While recent adjustments have lowered expectations for the company, it now stands as having the second-lowest adjusted earnings per share (EPS) growth forecast within the European defence sector. This forecast has been somewhat bolstered by the company’s share buyback program and its consistent dividend payments, maintained for 20 consecutive years, yet uncertainties persist. InvestingPro analysis shows the company maintains strong financial health with an overall score of 3.03 out of 4, suggesting resilience despite market challenges.
The resetting of expectations for QinetiQ has been acknowledged, with RBC Capital Markets emphasizing the need for the company to rebuild trust through consistent performance. The valuation of QinetiQ by RBC Capital is based on a calendar year 2025 estimated price-to-earnings (PE) ratio of 15 times, which supports the price target of 450 pence.
This new coverage and price target by RBC Capital Markets provide a current perspective on QinetiQ’s position in the market and its prospects, taking into account both its past performance and the challenges it faces going forward. The company’s ability to navigate these challenges and meet the revised expectations will be closely watched by investors and industry analysts alike.
In other recent news, Qinetiq (LON:QQ) Group has faced notable developments impacting its market outlook. Kepler Cheuvreux downgraded Qinetiq’s stock rating from Buy to Hold, adjusting the price target to GBP4.36 from GBP5.32. This decision followed a profit warning, prompting a revision in adjusted earnings per share estimates for fiscal years 2025-26. Kepler Cheuvreux now projects an adjusted EPS of approximately 25.9 pence for 2025 and 33.2 pence for 2026. In addition, Deutsche Bank (ETR:DBKGn) revised its price target for Qinetiq to GBP5.20 from GBP5.70, though it maintains a Buy rating. Contract delays and geopolitical uncertainties have affected Qinetiq’s short-cycle work in the UK Intelligence and US Sectors. Despite these challenges, Qinetiq’s management considers the disruptions temporary, highlighting the solid performance of its UK Defense business. The company has also announced a GBP200 million share buyback program over two years to partially offset impacts on net earnings before interest and taxes.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.