The defence sector is moving at a rapid pace; Leonardo is eyeing opportunities with Michelangelo Dome

(Il Sole 24 Ore Radiocor) - Buying in defence shares on the Milan Stock Exchange, with Avio , Fincantieri and Leonardo are all up by around one point. Regarding Leonardo, Banca Akros has confirmed its rating and target price, focusing in particular on the Michelangelo Dome, the group’s new air and missile defence system, which is expected to undergo operational testing in Ukraine by the end of the year.

"It is estimated that 20 customers are interested in the Michelangelo Dome, whilst Leonardo is collaborating with MBDA to expand the range of weapon systems available for the air defence shield," the analysts write. The group “forecasts that the air defence system will generate around 21 billion euros in commercial opportunities over a decade”, with an impact by 2030 “estimated at around 6 billion euros”. The system allows various existing defence systems to be linked within a single command infrastructure, although “obstacles to implementation could arise due to the different communication standards of military equipment”, Banca Akros points out. Following tests in Ukraine, NATO assessments are scheduled to begin in 2027, whilst full integration into NATO and EU defence systems is expected by 2030.

Further supporting this framework for Leonardo is the memorandum of understanding signed by its subsidiary Leonardo Drs with Space42, a UAE-based company specialising in space technologies and artificial intelligence. The agreement aims to combine Leonardo Drs’ C5ISR mission systems with Space42’s secure satellite communications and Beyond Line of Sight connectivity to develop next-generation national security systems in the UAE.

The rest of the sector is partly buoyed by its industrial link with Thyssenkrupp (+1.3% in Frankfurt), which operates in the naval defence sector through Marine Systems. In the third quarter, the German group reported an 8% rise in revenue to €8.8 billion and adjusted EBIT up 18% to 183 million, returning to a net profit of 34 million following a loss of 255 million a year earlier. The group has also raised the lower end of its guidance for full-year adjusted EBIT to 600–900 million from the previous 500–900 million.

However, there remains a note of caution regarding orders: in the quarter, Thyssenkrupp recorded new orders worth 7.7 billion, down from 10.1 billion in the previous year. This decline is mainly due to the comparison with a quarter that had benefited from major contracts secured by the Marine Systems division, including two submarines destined for South-East Asia and a support contract for the German Navy.