new-recommended-broker-banner new-recommended-broker-banner
Practice Stock Trading Your capital is at risk

QinetiQ (QQ) Share Price Plunged 9.28% as Investors Focused on Potential Writedown

Updated: 14 Oct 2021

QinetiQ Group plc (LON: QQ) share price plunged 9.28% after revealing that its performance during the first half of its financial year aligned with analysts expectations.

The British defence contractor secured orders worth £700 million during the six months, a 25% improvement to last year’s figures.

The firm reassured investors that it expects to generate mid-single-digit (5%) organic revenue growth for the entire financial year with underlying profit margins of 11% to 12%.

new-recommended-broker-banner

QinetiQ warned investors that it faces significant supply chain issues that could lead to a £15 million write-off affecting its short-term guidance.

However, the defence technology company maintained its medium to long-term guidance as it targets the mid-single-digit compound annual organic revenue growth for the next five years.

The company reiterated its commitment to generating 12-13% operating profit margins, despite its current margins being slightly lower than its targets.

QinetiQ noted that its EMEA services division was doing quite well with string orders, revenues, profits and cashflows, with impressive growth in the UK and Australia.

Its US business had weaker performance due to short-term COVID-related challenges, the installation of a new US administration and shifting customer priorities from Afghanistan to the Indo-Pacific region.

Some of the contracts won by QinetiQ during the review period include a $64 million  FRP contract from the US army to deliver over 1,200 CRS-I units on a multi-year timeline.

The company also secured an AU$27 million contract as a Major Services Provider for the Australian Department of Defence and another £68 million Weapons Sector Research Framework order with the UK Ministry of Defence (MoD).

Still, investors ignored all the positive milestones achieved by the company and focused on the potential $15 million write-downs, which drove the company’s shares lower.

*This is not investment advice.

QinetiQ share price.

IG chart of QinetiQ share price 14-10-2021

QinetiQ share price dropped 9.28% to trade at 292.3p, falling from Wednesday’s closing price of 322.2p.

Should you invest in QinetiQ shares?

If you’re a smart investor, you will know that having large-cap stocks in your portfolio is vital. They are more mature companies, considered safer investments, trade with less volatility, have greater analyst coverage, and in most cases, have a steady dividend stream. Due to the current market environment, we think now is the perfect time to add large-cap stocks to your portfolio. But which large-cap shares should you buy? Our stock analysts regularly review the market and share their picks for some of the best large-caps to invest in

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage . 75 % of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money .