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Rheinmetall's stock has surged 120% this year, driven by the defense industry's super cycle, particularly influenced by the war in Ukraine. Meanwhile, Thales, its French competitor, has also seen a significant rise, with UBS raising its price target from 160 to 330 euros, anticipating further growth due to favorable market conditions. Analysts believe Thales's growth outlook may be conservative, suggesting it could benefit substantially from the ongoing defense boom.
Thales, a leading French technology and defense company, is poised to benefit from a global supercycle in the armaments industry, with UBS raising its share price target from 160 to 330 euros and upgrading its rating to "Buy." The firm anticipates annual growth rates nearly double the management's cautious targets, supported by Thales' strong market position. With a market capitalization of around 49 billion euros and a 77% increase in share value this year, Thales is also part of the DER AKTIONÄR Weltraum Index, which includes other aerospace companies.
UBS has upgraded Thales shares from Neutral to Buy, increasing the target price from €160 to €330, citing strong positioning for the defense supercycle due to its focus on electronic systems and integrated communications. The broker raised its 2029 earnings-per-share estimates by 12% following a 25% increase in EBIT estimates for the defense sector. UBS also highlights cautious expectations for European defense spending, predicting a shift in market share from US firms to European players.
UBS has upgraded Thales shares from Neutral to Buy, increasing the target price from €160 to €330, citing strong positioning for the defense supercycle due to its focus on electronic systems and integrated communications. The broker raised its 2029 earnings-per-share estimates by 12% following a 25% increase in EBIT estimates for the defense sector. UBS also highlights cautious expectations for European defense spending, predicting a shift in market share from US primes to European players.
UBS has upgraded Thales shares from Neutral to Buy, increasing the target price from €160 to €330, citing the company's strong position in the defense supercycle due to its focus on electronic systems and integrated communications. The broker raised its 2029 earnings per share estimates by 12% following a 25% increase in EBIT estimates for the defense sector. UBS also highlights cautious expectations for European defense spending, projecting 2.5% of GDP by 2030, and has similarly upgraded Saab while downgrading Leonardo to Neutral.
UBS has upgraded Thales shares from Neutral to Buy, increasing the target price from €160 to €330, citing strong positioning for the defense supercycle due to its focus on electronic systems and integrated communications. The broker raised its 2029 earnings-per-share estimates by 12% following a 25% increase in EBIT estimates for the defense sector. UBS also highlights a trend of European defense players gaining market share from US primes, maintaining Buy ratings for several defense stocks while downgrading Leonardo to Neutral.
Francesco Ceccato, CEO of Barclays Europe, highlights the potential economic impact of US tariffs on Europe, noting that a 25% tariff could push the eurozone into recession. Despite concerns, European equities have outperformed US stocks this year, with a significant shift in fund manager positions favoring Europe. Increased defense spending in Germany may provide a boost, while Ceccato emphasizes the need for deeper capital markets to enhance competitiveness in the EU.
Morgan Stanley has raised its price target for Rheinmetall shares to €2,000, with a potential to reach €3,000 in a favorable scenario driven by increased European defense spending. Analysts project that Rheinmetall's capacity could double by 2030 if defense spending rises to 3% of GDP, leading to significant market share gains and a robust backlog. The company is expected to have around €7.5 billion in M&A potential by 2025, further supporting its growth trajectory.
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