Source: Sharecast
Ahead of its full-year results in May, the company announced it would take a £140m impairment charge amid persistently tough market conditions, hitting its UK and US divisions and resulting in further delays to a number of contract awards.
Management expects just 2% organic growth over the year ending 31 March, compared with Shore Capital's 6% forecast, while next year's guidance was for 3-5% growth, down from an earlier target of a high-single-digit improvement.
"QinetiQ’s shares had rallied by nearly 30% YTD before yesterday’s profit warning, following the re-rating of European A&D companies since Trump’s inauguration," said Shore Capital analyst Jamie Murray.
"However, yesterday’s profit warning will erode any positive sentiment towards QinetiQ, with the business now in position where it will have to rebuild trust."
The broker has a fair value estimate of 410p for the stock, which was down 4% at 399.8p by 1607 GMT following a 21% plunge the previous session.
JPMorgan Cazenove moved to an ‘overweight’ rating on Rio Tinto on Tuesday and 5,920p price target following a period of restriction during which the stock was not rated.
The bank noted that it upgraded its EMEA Metals & Mining sector view in February, reflecting its expectation for stronger China growth momentum following the annual NPC meeting on 5-8 March.
It pointed out that Rio shares are only around 3% higher over this period, outperforming the sector by around 5%, and that Rio is its only ‘overweight’ among EMEA diversified miners. JPM said it expects sustained outperformance versus peers in 2025.
"We forecast 25-30% EBITDA growth versus 2024E at spot commodity prices, 2025/26E mark to market EBITDA implies circa 25% upside to Bloomberg consensus largely due to the more than 10% rally in copper year-to-date, plus Rio’s trading multiples are at a 10-20% discount to peers and its own trading history (4.5x 2025/26E EV/EBITDA, circa 7% free cash flow yield)," it said.
JPM said Rio has substantially the highest copper volume growth of the EMEA diversified miners at more than 30% 2024-28E.
RBC Capital Markets upgraded Anglo American on Tuesday to ‘sector perform’ from ‘underperform’ and lifted the price target to 2,310p from 2,200p.
The bank downgraded Anglo in January, arguing that much of the good news on restructuring had been delivered and the trickier parts remained, such as De Beers and Woodsmith.
However, it said that a flurry of positive headlines followed as the miner got a good price for its nickel disposal, signed a marketing agreement with Botswana and agreed a joint venture with Codelco.
"This all helped offset consensus downgrades of 11% year-to-date," RBC said.
It said the next key event will be the spin of Anglo Platinum, but that it does not believe it will be a significant re-rating event.
RBC said it was updating its modelling to reflect the forthcoming spin out in June, changing its valuation methodology to reflect the higher proportion of copper earnings.
The bank said that in order to be a buyer, it would need to be more optimistic on the copper or iron ore premiums outlook.
