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Investing.com -- Serco Group (LON:SRP) stock rose 3.1% after the company announced its MT&S business has been awarded a significant contract to provide training and simulator services to the US Air Force.
The single-award indefinite delivery, indefinite quantity (IDIQ) contract represents a framework worth up to $972 million (£720 million) over five years.
The company expects the contract to generate $60 million (£45 million) in task orders in 2026, equivalent to approximately 1% of group revenues.
The contract will service over 20 US Air Force locations and is expected to reach a potential run-rate of $80-100 million annually from 2027 onwards, adding approximately 25% to the base MT&S business.
Analysts anticipate the contract will be accretive to Serco group margins.
This award demonstrates continued momentum in Serco’s defense operations following its recent acquisition of the MT&S business from Northrop Grumman.
While the contract may not significantly impact near-term financial forecasts, it helps underpin consensus expectations for accelerating growth of 2.5% in fiscal year 2026 and 4.5% in 2027.
Separately, Serco announced the appointment of Michael LaRouche as the new CEO of its North America division. "We see this appointment as an opportunistic upgrade to bring in an experienced leader with defence background (Lockheed/Raytheon) that can further support progress," according to Jefferies analysts.