Under 27% in 3 days! Should I buy the sauce in this FTSE 250 defense action?

With the European military expenditure scheduled to shoot in the coming years, defense actions have been in flames. BAE systemsFrom the blue chip Ftse 100 index, has increased 41% in three months, while Ftse 250's International Babcock He has shot 50% during that time.

Unfortunately, actions of Qinetiq Group (LSE: QQ) I have not kept the rhythm. In fact, 27% have crashed in the last three days!

Now, I am optimistic in European defense. It is difficult not to be when Germany has just voted to increase its military budget in response to the United States commitment to European security.

So is this an opportunity to add Qinetiq actions to my portfolio? Let's take a look.

What happened here?

The main culprit of the recent drop in action was a commercial update published on March 17. In this, the company warned that “difficult marketThe conditions would affect their finances for the whole year that ends on March 31.

Specifically, delays in a series of contracts in the United States and the United Kingdom have been granted. Also, he said “recent Geopolitical uncertainty has impacted our usual weighting of the fourth quarter to sales of greater margin products from the United States”

As a result, Qinetiq expects an organic income growth throughout the year of approximately 2%, approximately 1.95 billion in total revenues. That was lower than £ 2.04 billion analysts had accumulated.

Meanwhile, the company is restructuring its United States business to support future growth, which will result in a £ 140 million deterioration. In addition, there were £ 35 million- £ 40 million in unique and non-monetary positions, mainly in inherited US operations.

For next year, the company is guiding the growth of income of approximately 3%-5%, with an underlying profit margin of 11%-12%. That growth figure is also lower than expected above.

Some good bits

In a more positive note, its business in the United Kingdom defense sector (50% of group's income) continues to function well due to long -term contracts. And he announced a shares of shares of up to £ 200 million for two years, as of May.

The stock now looks quite cheap. The expected profits for 2025 are quoted at approximately 13 times, while offering a 2.3%dividend yield. That is a significant discount for other defense actions.

In addition, the company still sees solid long -term growth opportunities ahead: “Within the evolutionary threat environment, the expenditure priorities of our clients, which are well corresponded to our capabilities, have been driven by commitments with greater expense in the United Kingdom and Europe. “

Looking at the next few years, there is the possibility that the company ensures a large number of defense contracts in the United Kingdom and Europe. That could cause a change in the feeling of investors.

Should I buy Qinetiq shares?

Qinetiq generates most of its income from the United Kingdom. The government plans to increase the 2.5% defense expense of GDP in April 2027, above the current 2.3%. It could even go higher, but the money is tight and there will have to be cuts elsewhere.

Consequently, the growth perspective of the firm looks somewhat cloudy, while the impulse of continuous efficiency is creating a challenging backdrop throughout the pond. I fear to maintain, much less win, the United States defense contracts could be more challenging in the coming years.

Weighing things, I will not buy the sauce in this action ftse 250. I am happy to continue with BAE systems and Rolls-Royce For defense exposure in my Isa portfolio.