Shares round-up: easyJet, Qinetiq, Tui

FTSE 250 continues to break records, aided by these stocks.

The record-breaking performance of the FTSE 250 index continued today as sharply contrasting updates from defence firm QinetiQ (LSE:QQ.) and low-cost airline easyJet (LSE:EZJ) sent their shares sharply higher.

Qinetiq remains in a trading sweet spot as shares jumped another 8% on upgraded guidance for next month's annual results, which reflects impressive high teens percentage revenues growth. CEO Steve Wadey also reiterated the company's bullish longer-term forecasts.

Making any kind of revenues forecast is still beyond easyJet counterpart Johan Lundgren, but there was some encouragement today after he said losses in the six months to March 31 will be between £690 million and £730 million — better than City forecasts of £752 million.

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Passenger numbers slumped 89% to 4.1 million in the period but levels of cash burn in the second quarter were better than feared ahead of the expected resumption of activity in May.

Lundgren said: “We have the operational flexibility to rapidly increase flying and add destinations to match demand.

“easyJet is ready to resume flying, prepared for the ramp up and looking forward to being able to reunite people with their families or take them on leisure and business flights once again. As a result, we remain well positioned for the recovery this summer and beyond."

His bullish comments helped shares to rally 3% or 31p to 955p, having been sent lower earlier in the week by a couple of City downgrades. UBS has a price target of 1,125p, noting that today's update had something for bulls as well as those supporting the bear case.

The airline's performance enabled tour operator TUI (LSE:TUI) to improve 3% as the FTSE 250 index kept up its recent momentum to reach a fresh record of 22,357.

Qinetiq was comfortably the best-performing mid-cap stock of the session as the Farnborough-based science and engineering company continues to benefit from contracts such as the one unveiled in January to provide engineering services for Typhoon fighter jets.

The company was formed in 2001 when the Ministry of Defence split its Defence Evaluation and Research Agency in two. It was widely described at the time as the real-life version of agent Q from the James Bond films.

Analysts at Stifel said the positive end to the financial year raised hopes that Qinetiq can overachieve on its medium-term targets, which include doubling US revenues over the next five years.

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Stifel added: “We believe the company's ability to deliver on key, large-scale projects makes it a worthy ally for global defence ministries looking to identify evolving threats while facing budgetary pressures.”

Shares were 348p today, giving Qinetiq a market value of close to £2 billion, but analysts at Numis Securities believe there's scope for the shares to be trading at a record 400p based on 14.4 times 2022 earnings. They note that today's guidance for operating profits of at least £147 million in the year to March 31 came in about 6% higher than their previous estimate.

Qinetiq's performance is in contrast with the turmoil at fellow defence contractor Babcock International (LSE:BAB), where new chief executive David Lockwood yesterday announced £1.7 billion of asset write-downs and a restructuring potentially costing 1,000 jobs.

Shares today fell 3% to 311.1p, but this represents a solid performance considering that shares were up 32% yesterday after Lockwood said there was no need for a rights issue to bolster the balance sheet of the Royal Navy dockyard operator.

Broker Liberum said today: “Our analysis shows that recovery stories are hard to deliver, but share price recovery is more likely when dilution is avoided.” The broker has upgraded its target price from 350p to 375p.