HAG: European Defense Spending Will Drive Future Upside Despite Near Term Execution Risks

The analyst price target for Hensoldt has been trimmed to approximately EUR 93 from about EUR 99, as analysts factor in slower near term revenue growth, softer margin expectations and a modestly higher discount rate, while also highlighting valuation support and long term growth visibility reflected in recent Buy initiations and upgrades around the EUR 100 to EUR 114 range.

Analyst Commentary

Recent Street research on Hensoldt reflects a more nuanced stance, with targets converging around the low EUR 100s and opinions split between near term execution risk and long term growth and valuation support.

Bullish Takeaways

• Bullish analysts view the recent 20 percent share price pullback as having created an attractive entry point, with several Buy or Overweight stances supported by price targets around EUR 100 to EUR 114.
• Initiations with positive ratings highlight Hensoldt as a structural beneficiary of sustained European defense spending, underpinned by solid long term growth visibility into and beyond 2030.
• Some target cuts are framed as recalibrations rather than downgrades, with bullish analysts maintaining positive recommendations while trimming estimates to reflect more realistic growth and margin ramps.
• Medium to long term commentary around 2030 plus is viewed as reassuring, with updated forecasts still implying meaningful potential from current levels if execution improves as expected.

Bearish Takeaways

• Bearish analysts flag that sales growth and EBITDA margin improvement are now expected to be more back end loaded, raising concerns about near term execution risk and the timing of cash flow inflection.
• Some research notes describe the latest Capital Markets Day targets as underwhelming, pointing to a slowdown in growth before any reacceleration into the 2027 to 2030 period.
• Target reductions into the EUR 90 to EUR 101 range reflect more cautious assumptions on revenue conversion and profitability, with a view that previous expectations may have been too optimistic.
• Neutral and Hold stances emphasize that, despite long term potential, the current valuation is seen as already discounting a sizeable portion of the outer year growth story, which would leave limited room for further gains if execution slips.

What's in the News

• Hensoldt lowered its 2025 guidance and now expects revenue of approximately EUR 2,500 million, trimming the prior EUR 2,500 million to EUR 2,600 million range (company guidance)
• Hensoldt AG (XTRA:HAG) was added to the FTSE All-World Index, increasing its visibility among global equity investors and index-tracking funds (index provider announcement)

Valuation Changes

• Fair Value: reduced from approximately €98.7 to about €93.4, indicating a modest downward revision in intrinsic value estimates.
• Discount Rate: risen slightly from around 5.69 percent to roughly 5.79 percent, reflecting a marginally higher perceived risk profile or cost of capital.
• Revenue Growth: lowered from about 18.8 percent to approximately 16.9 percent, signaling a moderate tempering of medium term top line expectations.
• Net Profit Margin: trimmed from roughly 9.1 percent to about 8.2 percent, pointing to slightly softer profitability assumptions.
• Future P/E: increased from around 32.3x to approximately 36.7x, suggesting a higher valuation multiple relative to updated earnings forecasts.