Elbit Systems Ltd: $30bn Backlog, but at Premium Valuation

Research evidence excerpt

Elbit Systems Ltd: $30bn Backlog, but at Premium Valuation

he breadth and

Unless otherwise noted, all metrics are based on Morgan Stanley ModelWare

maturity of the Elbit portfolio. Meanwhile the company continues to invest to stay framework

** = Based on consensus methodology

ahead of the innovation curve with R&D spend reflecting ~6.9% of company sales in § = Consensus data is provided by Refinitiv Estimates

e = Morgan Stanley Research estimates

1Q26. Quarterly EPS ($)

2026e 2026e 2027e 2027e

While we recognize Elbit is off to a strong start this year, we see much of this Quarter 2025 Prior Current Prior Current

strength priced in at current levels, driving our EW rating. While we are raising Q1 2.58 3.72 3.87 - -

Q2 3.23 3.83 3.93 - -

earnings / FCF expectations over the 2026-2028 period, our PT moves lower to Q3 3.35 3.71 3.96 - -

$978 from $1,115 as we MTM valuation. Our valuation framework continues to Q4 3.56 4.23 4.09 - -

leverage a geography-weighted methodology and applies a premium to each peer e = Morgan Stanley Research estimates

group (US, Europe, Asia) based on the max premium Elbit has traded at vs. these

groups since 2022. Multiples across Elbit’s global defense peer set have contracted

in recent weeks, driving our PT update.

Exhibit 1: Valuation - Old vs. New

Weighting Median 27 P/E AppliedDiscountPremium / Implied Multiple

Geography Old New Comps Old New Old New Old New

US Defense Primes 24x 19x 184% 184% 68x 54x

US Defense Suppliers 43x 41x 64% 64% 71x 67x

North America 19% 19% Avg. of US Defense Primes & Suppliers 70x 60x

Israel 32% 32% European Defense Primes 26x 22x 124% 124% 59x 49x

Europe 30% 30% European Defense Primes 26x 22x 124% 124% 59x 49x

Asia 17% 17% Asia Defense Primes 26x 27x 139% 139% 62x 63x