LONDON (ShareCast) - (Sharecast News) - Shore Capital on Tuesday cut its recommendation for QinetiQ from 'buy' to 'hold' following a profit warning from the UK defence contractor on Monday.
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.

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