Leonardo on the shields, for Mediobanca EU military spending towards new increases
Piazzetta Cuccia raised the price target by pointing out that NATO could increase its spending target by 2% of GDP
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(Il Sole 24 Ore Radiocor) Purchases on Leonardo - Finmeccanica, which is one of the best performers on the Ftse MIb. Mediobanca's decision to raise the company's target price to €28, reaffirming its Outperform rating, drove the share price. In detail, in a report, analysts believe thatafter an 'unprecedented increase in defence budgets in 2023, military spending will continue to grow, as NATO could increase its spending target by 2% of GDP'. This could therefore represent a significant opportunity for EU contractors, and in particular Leonardo, 'which we quantify at EUR 10 billion per year by 2035'. According to the brokers, 'around 50 per cent of this investment could materialise by 2035. Among the main opportunities for the group, we include the sixth-generation fighter (GCAP) and the European main battle tank, which could be worth 1-2 billion euros per year'. Analysts also raise revenue estimates to 'average 3% in FY26-28. This includes a 1% revision in FY2026, rising to +6% in FY2028, supported by progress on EU initiatives'.
