Western Europe Aerospace & Defense: What‘s priced in in defense? Germany looks to have value

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Western Europe Aerospace & Defense: What‘s priced in in defense? Germany looks to have value

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16 Jun 2026 17:00:24 ET │ 20 pages

Western Europe Aerospace & Defense

What’s priced in in defense? Germany looks to have value

CITI'S TAKE

Charles J Armitage AC

Following the recent defense pricing decline, we’ve rerun our “What’s priced +44-20-7986-1089

in” methodology, estimating what profit growth is needed in the medium charles.armitage@citi.com

term to justify current share prices. The German stocks, which have high

consensus growth out to 2030, are now pricing generally negative growth Rodrigo Campo

post-2030, suggesting the market doesn’t believe consensus forecasts or +44-20-7508-9523

profits are unsustainable (we believe this is overdone and expect the shares rodrigo.campo@citi.com

to perform as the orders materialize through the rest of the year).

Exosens and Saab pricing in a lot of growth post 2030 — The implied 2030-35

profit CAGR appears most demanding for EXOSENS and SAAB, at 15% and 12%

respectively, taking 2035 profit to 3.4x and 3.5x 2026 levels. This implies investors

need to believe that SAAB can grow 15% profit CAGR over 2026-35, implying a 1.7x

growth multiplier. Exosens has a less challenging scenario with a required growth at

1.4x but still driving in a high 14% profit CAGR.

Other very high growth stocks 2026-30 pricing in negative growth post 2030 —

By contrast, names with a higher 2026-30 consensus growth, such as Rheinmetall

(35%), Renk (25%), TKMS (21%), and Dassault (20%), require much less incremental

growth 2030-2035 CAGRs with negative 2030-2035 CAGR. As ever, there are

reasons behind this – we do expect Germa budget growth to slow post-2030 (see

figure 3), orders in Germany have not materialized as quickly as expected, but we