Citi has issued a 'buy' rating for Serco Group PLC (LSE:SRP), the support services group, citing the potential for the company to benefit from accelerating growth in US defence spending and the expansion of the US Navy.
The bank's call is based on the expansion of the US Navy from just under 300 ships to 398-512, manned and unmanned.
Citi's forecast 2024 adjusted EBIT for Serco is £259m, which is around 5% above the consensus of £247m, and its 2025 adjusted EBIT prediction is also around 5% above consensus.
Citi's target price for Serco remains at £2.30, and the bank has not adjusted its forecasts.
The shares advanced 3% to 155p.