European Defence: Some thoughts on current European defence valuation levels

Research evidence excerpt

European Defence: Some thoughts on current European defence valuation levels

Deutsche Bank

Research

Europe Industry Date

Germany 13 May 2026

European Defence

Aerospace & Defence Industry Update

Aerospace & Defence

Some thoughts on current European

defence valuation levels

Christophe Menard

European Defence stocks have underperformed both EU Aerospace and US

Research Analyst

Defence in the last week, with year-to-date performance broadly stable. Several +33-1-4495-9315

reasons could potentially explain this backdrop: concerns over defence budget

implementation and the potential reprioritisation of defence spend. We think Christoph Laskawi

these are overdone. Sector rotation is another possible cause, with some pockets

+49-69-910-31924

of 2025 outperformance seen as deflating. We remain overweight EU Defence and

see the current backdrop as entry point opportunity. Sriram Krishnan, CFA

+44-20-7541-0983

Political uncertainties not impacting Defence Budget, in our view

Concerns over defence budget allocation are likely overdone. While growing Samrudh Agrawal

political uncertainties across Europe are present, they are not significant enough to Research Associate

challenge existing budget commitments. Although some main European countries

may show signs of ruling coalitions facing challenges and potential weakening due

Top Picks

to internal dissent, there is nothing to suggest any immediate political changes.

Rheinmetall (RHMG.DE),EUR1,185.60 Buy

Therefore, defence budget commitments are viewed as firm.

Hensoldt (HAGG.DE),EUR71.22 Buy

Renk AG (R3NK.DE),EUR46.30 Buy

Extra Defence Funding, with no reprioritisation of Land capabilities

There is no evidence of a reprioritisation in defence budget allocations across major Source: Deutsche Bank