Serco Group (LSE:SRP) shares rose 3.1% following the announcement that its MT&S business has been awarded a major contract to provide training and simulator services to the US Air Force.
The single-award indefinite delivery, indefinite quantity (IDIQ) framework is valued at up to $972 million (£720 million) over five years. Serco expects the contract to generate approximately $60 million (£45 million) in task orders in 2026, representing about 1% of group revenues.
The agreement covers over 20 US Air Force locations and is projected to reach a potential annual run-rate of $80–100 million from 2027, contributing around 25% to the core MT&S business. Analysts expect the contract to enhance group margins and support ongoing growth in Serco’s defense operations, following its recent acquisition of MT&S from Northrop Grumman.
While the contract’s immediate impact on near-term financials is limited, it reinforces consensus expectations for 2.5% growth in FY2026 and 4.5% in FY2027. Separately, Serco announced Michael LaRouche as the new CEO of its North America division. Analysts at Jefferies noted that his defense experience with Lockheed and Raytheon positions the company well for further progress in the region.
This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.
Leave a Reply