Barclays has given QinetiQ Group PLC (LSE:QQ.) a positive 'overweight' rating after the security and defence contractor upgraded its guidance for 2023 financial year.
The guidance upgrade for 2023 implies a 4% earnings-per-share upgrade with around 10% organic group revenue growth and underlying operating profit of at least £175mln, the bank said.
Barclays expects “positive commentary on longer-term growth ambitions” when the British multinational provides preliminary results on May 25
QinetiQ’s $590mln (£474mln) acquisition Avantus four months ago is integrating ahead of plans, though orders are “a little light”.
“In our view, a higher interest rate environment and a de-geared balance sheet will place QinetiQ in a favourable position for future bolt-on activity, funded partially or solely via free cash flow,” said Barclays, giving the group a price target of 465p against a publication price of 352p.