QinetiQ Group PLC (LSE:QQ.) faces near-term uncertainty but remains undervalued on a mid-to-long-term basis, according to Citi.
The US bank cut its target price to 510p from 530p, to reflect cuts to forecasts following the profit warning earlier this month.
Revenues for the FTSE 250-listed group are now seen coming in at around £2.1 billion in 2027, down from £2.4 billion, with a 15% cut to mid-term underlying profit (EBIT) forecasts.
Citi kept its rating at 'buy', saying the impact of the profit warning on the shares' fair value is "somewhat offset" by the announced £200 million share buyback.
"We still believe the stock is undervalued given the healthy cash generation, relatively unlevered balance sheet, and growing European defence spend," the bank's analysts wrote.
"However, near-term, the uncertainty around the US business and headwinds ahead of UK Strategic Defence Review are likely to be an overhang until clarity emerges around the political decision making in both countries."