Thales (ENXTPA:HO) Valuation in Focus After Breakthrough Sonar Integration with Huntington Ingalls Industries

Thales (ENXTPA:HO) has caught investors’ eyes after announcing a successful technology integration with Huntington Ingalls Industries. The collaboration showcased Thales’ advanced SAMDIS 600 sonar working seamlessly with HII’s latest unmanned underwater vehicle. This marks a leap forward for autonomous underwater mine countermeasure systems. For a company already reputable in naval defense, this milestone could have far-reaching implications for future contracts and international partnerships. This new achievement builds on a year of solid momentum for Thales. While the past three months saw shares moving sideways, the stock has climbed 72% over the last year and is up more than 82% in 2024. Previous events, including high-profile presentations and other technology partnerships, have fueled periodic bursts of interest. However, it is this integration milestone that seems to be rekindling market enthusiasm and suggesting growing confidence in Thales’ strategic direction and innovation track record. So after such a strong run this year, is Thales trading at a bargain with more upside to come, or are investors already baking in future growth expectations?

Most Popular Narrative: 10% Undervalued

According to the most popular narrative, Thales shares are currently trading at a notable discount to their estimated fair value. This perspective is built on a blend of sector trends, company-specific catalysts, and analyst consensus around future growth.

“Acceleration of defense spending in France and across Europe, for example, France raising its defense budget from €50 billion in 2025 to €64 billion by 2027, earlier than previously planned, is set to significantly boost order intake and revenue for Thales' defense segment. This is expected to support multi-year revenue growth visibility.”

Want to know what is fueling this bullish view? The backbone of this narrative is a high-stakes mix of ambitious growth projections and profit margins that could reshape Thales’ valuation in just a few years. Imagine the share price leaping ahead on big earnings and industry-defining targets. Wondering how the numbers stack up and what analysts see on the horizon? Read on to uncover the pivotal assumptions powering this fair value.

Result: Fair Value of €279.21 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, challenges such as bumps in Thales’ digital transformation or delayed defense orders could quickly shake the current optimism and growth narrative.

Find out about the key risks to this Thales narrative.

Another View: Multiples Tell a Different Story

While the fair value discussion points to Thales being undervalued, a look at how the company is priced compared to the rest of the industry raises doubts. This approach suggests that the shares may be expensive rather than a bargain. Could the multiples be signaling a different reality?

See what the numbers say about this price — find out in our valuation breakdown.

Stay updated when valuation signals shift by adding Thales to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Thales Narrative

If you have a different perspective or want to dig into the details on your own, you can craft a personalized view in just a few minutes. Do it your way

A great starting point for your Thales research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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