QinetiQ Group PLC (LSE:QQ.) management’s willingness to return capital to shareholders (plus strong growth in the core business and a supportive defence spending environment) have prompted Citi to upgrade its target price to 530p.
“We believe investor concerns around management pursuing expensive, but non-value accretive acquisitions are increasingly being assuaged by management actions,” said the US bank.
“With investors positively surprised by FY24 free cash flow, we think cash conversion will remain strong over the mid-term, giving the company optionality on capital returns, while pursuing HSD top line growth to reach their FY27 sales target of £2.4bn.”
Citi added the defence company's valuation is still attractive and it remains a buyer. Shares eased 0.3% to 452.8p.