QinetiQ’s Q1 AGM trading update reiterated the tone of the full-year results with trading in line with expectations and a cautious outlook for FY16. While the Strategic Defence and Security Review (SDSR) provides some uncertainty, the government’s pledge to maintain 2% of GDP spending on defence improves the backdrop. With both divisions exhibiting positive signs, supported by in-year order cover (reiterated as at the full-year results), and with the full benefit of the share buyback to come, our forecasts are maintained.