QinetiQ Group (LSE:QQ.) delivered a first-quarter trading update that was broadly in line with market expectations and reaffirmed its financial targets for fiscal 2027, while highlighting continued confidence in its long-term growth strategy.
The defence technology company said it expects first-half revenue to account for around 46% of full-year sales, a level Barclays analysts said is consistent with historical seasonal trends. Based on current forecasts, that implies first-half revenue of approximately £920 million with an underlying operating profit margin of about 11%.
Share buyback programme continues
During the first quarter, QinetiQ repurchased £32 million of shares as part of its ongoing £100 million buyback programme.
The company expects to complete the remaining £68 million of repurchases by March 2027.
Management also confirmed its full-year outlook remains unchanged, with guidance calling for organic revenue growth of between 3% and 5%, an underlying operating margin of approximately 11.0% to 11.5%, earnings growth of 8% to 10%, and cash conversion above 90%.
QinetiQ added that it continues to evaluate strategic options for its U.S. operations and plans to provide a further update alongside its interim results on 12 November 2026.
Barclays sees no change to forecasts
“As a result of this, we make no changes to our FY forecasts and expect consensus to stay at ~£228m,” Barclays analysts said following the update.
The bank noted that the company’s order backlog remains strong and visibility has improved following the UK government’s recently announced Defence Investment Plan (DIP).
Defence spending expected to support long-term growth
Barclays said the Defence Investment Plan, unveiled on 30 June 2026, provides greater clarity over future defence procurement and military capability spending as the UK and other European countries continue increasing investment in national security.
The analysts also described QinetiQ as “still the cheapest stock in U.K. defence,” noting that the shares trade at approximately 9.5 times enterprise value to EBIT compared with an average multiple of around 12.5 times for UK defence peers.
According to Barclays, QinetiQ’s expertise in testing and evaluation, cyber security, digital integration and applied research positions the company to benefit from increased Ministry of Defence spending as military modernisation efforts accelerate.
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