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On Friday, RBC Capital Markets adjusted its price target for QinetiQ Group (QQ:LN) (OTC: QNTQY), a British multinational defense technology company. The new price target is set at GBP4.70, up from the previous GBP4.50, while the firm maintained a Sector Perform rating on the stock. The company’s stock has shown remarkable momentum, with InvestingPro data showing a 47% return over the past year and a 27% gain year-to-date.
The adjustment by RBC Capital’s analyst comes after an update to their financial model for the fiscal year 2025. The forward-looking valuation now extends into FY26, which underpins the increased price target. The new target implies a price-to-earnings (PE) ratio of 15.6 times for the calendar year 2025 and 13.7 times for 2026. These figures stand in contrast to the European defense sector’s PE ratios of 26.9 times for 2025 and 23.1 times for 2026. According to InvestingPro analysis, QinetiQ maintains a perfect Piotroski Score of 9, indicating strong financial health, while trading at attractive valuations relative to its growth potential.
QinetiQ Group’s adjusted earnings per share (EPS) growth is anticipated to be lower than the sector average, with a compound annual growth rate (CAGR) of 12% from the calendar year 2025 to 2027, compared to the sector’s 19% CAGR. RBC Capital Markets notes that QinetiQ’s earnings growth has been somewhat enhanced by its share buyback program. The company has demonstrated solid financial performance with a 10.4% revenue growth in the last twelve months and maintains a moderate debt level with a debt-to-equity ratio of 0.42.
Furthermore, the analyst pointed out that there is still some uncertainty surrounding QinetiQ’s business in the United States and the company’s mid-term outlook. However, it is expected that this uncertainty will be resolved by late summer, providing a clearer picture of the company’s future performance.
Investors and stakeholders in QinetiQ Group will be watching closely to see how the company’s strategic decisions and market conditions align with RBC Capital Markets’ projections and whether the anticipated clarity on the US business front materializes in the coming months.
In other recent news, QinetiQ Group has been the focus of several analyst assessments and company developments. Kepler Cheuvreux downgraded QinetiQ’s stock rating from Buy to Hold, reducing the price target to GBP4.36, following a profit warning. The firm revised its adjusted earnings per share estimates for fiscal years 2025-26, citing increased volatility in defense budgets as a key factor. Additionally, Deutsche Bank (ETR:DBKGn) lowered its price target for QinetiQ to GBP5.20 from GBP5.70 but maintained a Buy rating, attributing the adjustment to contract delays and geopolitical uncertainties affecting near-term trading prospects.
QinetiQ has been experiencing disruptions in its UK Intelligence and US Sectors due to delayed contract awards and tighter export controls. Despite these challenges, the company announced a GBP200 million share buyback program over two years to partially offset negative impacts on net earnings before interest and taxes and adjusted EPS. RBC Capital Markets also initiated coverage on QinetiQ with a Sector Perform rating and a price target of GBP4.50, noting the company’s unique position in the market and its longstanding relationship with the UK Ministry of Defence. The analysts’ outlooks reflect the ongoing uncertainties in the defense sector and QinetiQ’s efforts to navigate through these challenges.
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