Analysts have slightly lowered Leonardo’s price target to €53.38 as high sector valuations and a relatively lower growth profile temper optimism toward robust European defense spending, resulting in only a marginal fair value revision.
Analyst Commentary
- Bullish analysts see Leonardo benefiting from Europe's strongest defense spending cycle since the Cold War, supporting sector-wide top-line growth.
- JPMorgan’s price target raise reflects increased confidence in Leonardo’s ability to capitalize on elevated defense budgets and improved execution.
- Bullish sentiment tempered by concerns about high stock valuations, prompting some to advocate a more selective approach within the sector.
- Relative to European defense peers, analysts note Leonardo's growth profile is somewhat lower, constraining upside versus higher-growth names.
- Neutral or equal-weight stances emphasize balanced risk/reward, with macro drivers offset by valuation and relative growth concerns.
What's in the News
- Leonardo, Thales, and Airbus are expected to sign an initial agreement this year to combine their satellite businesses, according to comments from the head of Airbus' defense and space division (Reuters).
- Leonardo and Textron Aviation Defense have entered a teaming agreement to offer the Beechcraft M-346N jet for the U.S. Navy Undergraduate Jet Training System program, leveraging Leonardo’s established M-346 platform for advanced pilot training (Client Announcements).
- Leonardo is in advanced negotiations to acquire Iveco Group’s defense unit, a move supported by the Italian government, which may facilitate the subsequent sale of Iveco's commercial trucking operations to Tata Motors (Key Developments).
- Leonardo reportedly made the lowest bid (about €1.6 billion including debt) for Iveco's defense unit but is favored for political reasons to keep the business in Italian hands; final decisions are pending (Key Developments).
- A strategic partnership agreement has been signed between Leonardo and SSH Communications Security for Zero Trust and Quantum-Safe network encryption solutions, enhancing Leonardo’s defense offerings; the agreement is contingent on the completion of Leonardo’s share issue (Key Developments).
Valuation Changes
Summary of Valuation Changes for Leonardo
- The Consensus Analyst Price Target remained effectively unchanged, moving only marginally from €53.99 to €53.38.
- The Future P/E for Leonardo has fallen slightly from 27.90x to 27.29x.
- The Net Profit Margin for Leonardo remained effectively unchanged, moving only marginally from 6.59% to 6.68%.
Disclaimer
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