Qinetiq Group PLC  

Qinetiq Group PLC (LSE: QQ.) is an FTSE 250 index-listed Farnborough, United Kingdom-headquartered leading science and engineering company that seeks to help customers protect and advance their vital interests by providing technological and scientific expertise. This Report covers the Key Recommendation Rationale, Conclusion, and Recommendation on the stock.

Key Recommendation Rationale – Sell at GBX 419.40

• Resistance near Current levels:’s stock price crossed the Resistance (R2) which was stated in the previous report on 17 April 2024 and might witness some sell-off from the current levels. Considering the market conditions and the price action, it is prudent to exit the stock, as the prices might pull back from these levels.
• Sluggish Profitability Margins: In H1 FY24, the Operating margin of QQ. was 10.6% against 19.6% in pcp and the net margin slipped to 7.2% in H1 FY24 versus 16.4% in H1 FY23.
• Expensive Valuation: The stock of QQ. is currently offered at 7.6x on EV/EBITDA-based relative valuation (NTM) as compared to the industry (Industrials) mean of 2.8x. On Price/ Cash flow-based relative valuation (NTM), the stock is valued at 10.3x which is higher than the industry mean of 9.8x.
• Macroeconomic Risk: The market sentiments can remain weak in the short-term due to the subdued consumer disposable income, geopolitical tensions, and political risks.

Valuation Methodology: Price/Earnings Approach

Share Price Chart  

Conclusion

Based on the notional gains, macroeconomic challenges, and price action stance, a "SELL" recommendation on Qinetiq Group PLC (LSE: QQ.) has been given at the current market price of GBX 419.40 (as of 23 May 2024, 08:15 AM GMT+1).

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 23 May 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.