QinetiQ shares rose more than 12% in London trading on Thursday after the company reported better-than-expected earnings and revenue for its 2024 financial year.
The firm reported revenue of £1,912 million, up 2% from consensus estimates.
EBITA for the year was £215m, also 2% above consensus, and earnings per share (EPS) were 29.4p, beating expectations by 6%.
Cash conversion was strong at 104%, resulting in net debt of £151m, 14% below consensus estimates.
In the Europe, Middle East and Africa (EMEA) Services division, organic revenue grew by 19% to £1,417 million. EBITA for the segment was £163.4m on a margin of 11.5%, down 10 basis points on FY23.
Looking ahead, QinetiQ is raising its forecast for fiscal 2025, expecting strong growth in EMEA services and stable performance in global solutions.
“This is a strong FY24 performance for QinetiQ, although in our view it is not enough to support the initial +10% share price reaction,” Jefferies analysts commented.
“Higher FY24 exits should lift LSD to FY25 EBITA guidance, with order cover for expected revenues at 64%, above last year’s level of 61% and increasing to 70% if unfunded US orders are included,” the analysts added.
“More broadly, we feel a growing level of confidence in the group’s ability to deliver organic revenue of £2.4 billion in FY27.”