Sector movers: QinetiQ leads defence stocks higher on M&A reports

21st Oct 2013 15:44

Aerospace and defence stocks were gaining ground on Monday as deal speculation, trading updates and upbeat broker commentary lifted the sector higher.QinetiQ, the defence technology and security firm, was a high riser today on weekend reports that it is putting its US division up for sale. Hopes have now been ignited over an impending disposal after The Sunday Times reported that QinetiQ sent sale documents to potential suitors last week. "Industry sources believe the sale of the American business could spark interest in the rest of QinetiQ," the paper also said.The stock, with a current market capitalisation of around £1.34bn, was trading 4.59% higher at 202.8p on Monday afternoon.Aerospace and defence engineer Senior was trading up 1.02% after strong order books at Airbus and Boeing helped it keep profits on track since early July.Senior said adjusted pre-tax profit since July 1st was in line with its expectations and net debt at the end of September had fallen to £61m, £10m lower than at the start of the year.Sector heavyweights Rolls-Royce and BAE Systems were also making decent gains today after analysts Devang Doshi and Natalia Mamaeva from Citigroup said that remained "constructive" on civil aerospace stocks."Our positive outlook on civil aerospace is driven by ramp-up in production of new aircraft and rising production of legacy aircraft. Record backlogs, better-than-expected aircraft orders and robust air traffic trends remain supportive of an ongoing delivery cycle upturn."In contrast, the analysts said they would stay cautious on the defence sector given that defence budgets in the US and Europe are expected to be "roughly flat" over the coming years. However, they did note that the recent agreement on Capitol Hill over a short-term increase in the debt ceiling "has removed some immediate risks overhanging US defence". However, they said these would re-appear early next year.Others in the sector including Meggitt, Cobham, Ultra Electronics, Manroy and Cohort were also in positive territory in afternoon trade.Top performing sectors so far todayTechnology Hardware & Equipment 1,211.40 +2.67%Aerospace and Defence 5,141.71 +2.25%Oil Equipment, Services & Distribution 24,658.89 +2.01%General Industrials 4,313.25 +1.64%Support Services 6,341.34 +1.51%Bottom performing sectors so far todayAutomobiles & Parts 8,482.50 -2.13%Life Insurance 6,678.57 -0.44%General Retailers 2,690.80 -0.41%Mobile Telecommunications 5,280.52 -0.33%Real Estate Investment Trusts 2,540.68 -0.31%BC