QinetiQ Group PLC (LSE:QQ.) has been caned following the revelation in October of a £14.5mln provision on a problem contract, but Citigroup says that’s enough as its view to ‘buy.’
Citigroup accepts that there remains a significant risk for investors on both this contract and the risk management process, so the new rating comes with plenty of caveats.
The US bank believes though that these risks are more than priced into its current price and it expects the shares to rerate next year as the problems recede.
Even so, Citigroup has cut its target price by 30p to 340p assuming it is a one-off problem, but this still represents some 33% upside on its current price.
The high-tech defense group’s share price rose 4.7% on Friday to 256.4p.