Thales Overall a very solid beat in H1 26; but Cyber & Digital earnings have collapsed and action may be needed

Research evidence excerpt

Thales Overall a very solid beat in H1 26; but Cyber & Digital earnings have collapsed and action may be needed

J P M O R G A N Europe Equity Research

23 July 2026

Thales Neutral

TCFP.PA, HO FP

Overall a very solid beat in H1 26; but Cyber & Digital Price (22 Jul 26):€226.8

earnings have collapsed and action may be needed Price Target (Dec-27):€275.0

Our Take: Vs. company-compiled consensus Thales H1 26 EBITA and EPS are European Aerospace & Defense

ACa 4% and 13% beat (Table 1). FCF is exceptionally strong, coming in cEUR1.4bn David H Perry, CFA

higher than consensus, owing to strong order intake and favourable advanced (44-20) 7742-5606

payments. HO confirmed its 2026 guidance. We expect the shares to trade higher david.h.perry@jpmorgan.com

today. However, the overall print confirms the trends of the last two years: Thales’ J.P. Morgan Securities plc

Defence business is delivering exceptionally good results but the Cyber & Digital Lucy Fitzgerald

(C&D) division is becoming a major drag on the group results. The Digital segment (44 20) 3493-5251

lucy.fitzgerald@jpmorgan.com

in particular is a concern, with Adj. EBIT down 40% yoy. We are increasingly J.P. Morgan Securities plc

concerned that this is not a cyclical dip but may represent structural decline in the

Jash R Naik

relevant markets (notably bank payments and mobile SIMs). Perhaps it is time for (91 22) 6157-3797

Thales to divest this business to let the core Defence and Aerospace business shine jash.naik@jpmchase.com

and attract a better valuation. J.P. Morgan India Private Limited

Titus MacDermot

• Noteworthy Areas (1) - Core Defence and Aerospace divisions were very (44-20) 3493-7137

strong: Table 1 shows the H1 26 results. Defence delivered 13% organic titus.macdermot@jpmorgan.com