QinetiQ Shares: Zeus Capital Bullish, Sees “Attractive” Defence Tech Value

Zeus Capital initiated coverage of QinetiQ (LON: QQ.) with a Buy rating and a target price of 550p in a note on Wednesday, arguing the defence technology group offers “high returns and strong free cash generation, at an attractive valuation.”

Zeus Capital analyst Robin Byde told investors that QinetiQ sits at the intersection of defence science, engineering and technology, helping governments and militaries develop, test and deploy advanced capabilities as a “trusted sovereign partner.”

While activity remains mainly UK-focused, the firm sees multiple growth outlets with European NATO partners.

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The analyst highlighted the UK Government’s Defence Investment Plan, published on 30 June 2026, as a supportive backdrop, noting it places clear emphasis on areas where QinetiQ has direct exposure, including test and evaluation, mission systems integration, training and readiness, digital capability, autonomy, cyber, and directed energy.

Zeus Capital also highlighted that QinetiQ trades on an undemanding calendar year 2026 P/E of 15.8x, falling to 14.0x in 2027, compared with a UK defence sector forward average of 18.2x and the wider European sector at 19.5x.

Furthermore, Byde pointed to QinetiQ’s positive Q1/AGM statement, which confirmed trading consistent with full-year consensus expectations, alongside unchanged FY27 guidance of 3-5% revenue growth, 11.0-11.5% underlying operating profit margin, 8-10% EPS growth, and more than 90% cash conversion.

He also cited QinetiQ’s strong free cash generation, mentioning that the Group repurchased £32 million of shares in Q1, with a further £200 million buyback programme set to follow, alongside potential capital from a possible disposal of its US business.