UK's defence solutions provider QinetiQ H1 revenue rises on higher orders, maintains FY outlook

Overview

• UK defence solutions provider's H1 revenue rose 3% yr/yr, underlying operating profit up 14%

• Company agreed to sell US business for $292 mln to focus on core markets

• Full-year guidance confirmed; plans to return more cash via increased buybacks and 33% higher dividend

Outlook

• QinetiQ confirms FY27 guidance: revenue growth 3-5%, operating margin 11.0-11.5%

• Company expects FY27 EPS growth of 8-10% and cash conversion above 90%

• QinetiQ plans to return £200 mln to shareholders via increased buybacks after US sale completes

Result Drivers

• WARFIGHTING READINESS DEMAND - Co said increased demand for warfighting readiness among UK and allied customers drove higher orders and revenue

• PROGRAMME EXECUTION - Underlying operating profit margin improved due to disciplined execution and consistent delivery against backlog, especially in EMEA services

• TEST AND TRAINING ACTIVITY - Co said trials revenue rose 50% in H1 as UK and allied customers increased use of specialist test and training facilities

Company press release:

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 9 "strong buy" or "buy", 2 "hold" and 1 "sell" or "strong sell"

• The average consensus recommendation for the aerospace & defense peer group is "buy"

• Wall Street's median 12-month price target for QinetiQ Group PLC is GBp600.00, about 14.7% above its November 11 closing price of GBp523.00

• The stock recently traded at 14 times the next 12-month earnings vs. a P/E of 14 three months ago

Reuters Recommended Reads

• Nov 10 - Britain to invest £90 million in drones, sensors to counter Russian undersea threats

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• Nov 11 - Germany's SFC Energy Q3 sales jump to record on defense segment

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)