Defense Electronics Tops Execution Pecking Order; Upgrade LDO to Buy

研报英文原文证据摘录

Defense Electronics Tops Execution Pecking Order; Upgrade LDO to Buy

he shares have followed the recent defense sector de-rating but remain the lowest-valued CSG € 25 85%

air defense play, at 14x 12m fwd EV/EBIT. We appreciate the group's exposure to MBDA, a major Rolls-Royce € 1,870 30%

driver in our view for upside on the 2029 outlook given the ongoing ramp and accelerated capex Buy

plan, while opportunities for exports of the SAMP/T NG, Eurofighter and the removal of concerns Dassault Av. € 410 42%

over GCAP funding are all positives in the investment case, in our view. With some potential for a RENK € 60 37%

guidance upgrade with H1 results, we see the set-up as clearly positive for Leonardo. We stand 8% Hensoldt € 94 27%

above consensus on 2028E EBIT, baking into our expectations a stronger DE&E performance. With Thales € 290 28%

30% potential upside to our PT, Leonardo replaces Rheinmetall as our sector top pick. MTU Aero € 445 23%

Rheinmetall € 1,300 28%

Some caution still on civil as multiples still high despite risks of re-escalation. We keep some Hold

caution on the civil sector as the situation in Iran remains volatile. However we continue to see an BAE Systems € 2,100 14%

appealing risk reward in Rolls-Royce, our Civil top pick, as we expect a meaningful guidance upgrade Airbus € 200 2%

on continued strong margin recovery in Civil aftermarket and Power Systems strength. We also . Safran € 330 -3%

maintain MTU as Buy, given its de-rated profile, with the improvement in the number of aircraft on Source: Jefferies

ground is supportive of some re-rating, in our view.

Q2 expectations & debrief of recent company contacts. In this note we also provide our

expectations for Q2, where we expect guidance increases for Rolls-Royce (Power Systems, solid