- QinetiQ Group
- 02 June 2025 13:13:32
Source: Sharecast
In an interview with The Times published this weekend, defence secretary John Healey said there as "no doubt" that UK defence spending would increase to the equivalent of 3% of GDP by 2034.
That follows comments in February from prime minister Keir Starmer that defence spending would rise to 2.5% by April 2027 with an "ambition" to hit 3% by 2034.
The Office for Budget Responsibility has said that meeting the 3% target "would cost an additional £17.3bn in 2029-30".
"This is most positive for QinetiQ in our aerospace and defence coverage as it derives the highest share of revenue - 57% - from the UK Ministry of Defence," Berenberg said in a research note.
"This positive UK backdrop continues to underpin the outlook, and the US outlook is de-risked given the restructuring and the company's decision to focus on four business areas."
Berenberg added that the stock, which it rates a 'buy', still trades at a 25% discount to others in the UK defence sector on a price-to-earnings basis. The broker set a new target price of 570p for the shares, up from 500p previously.
The stock was up 5.2% at 522.79p by 1304 BST.