(AOF) – Thales (+1.23% to 160.75 euros) recorded one of the largest increases in the CAC 40 in the context of renewed tensions in the Middle East. The defense company’s action also saw its title progress after Berenberg’s recommendation was maintained. The research office remains Buy on the stock while increasing its price target from 165 to 180 euros. “Thales shares have performed well since the publication of the annual results on March 5, with an increase of 15%,” explains Berenberg.
“We believe that the stock could continue to advance in 2024 thanks to an acceleration in defense orders and the next investor day in November,” specifies the broker.
According to him, “Thales’ order intake will increase by 25% year-on-year in the first quarter to reach 4.27 billion euros.”
The research firm further highlights that the valuation of Thales assets is attractive with a 2024 PER of 18.4 for average annual growth in earnings per share expected at 10% between 2025 and 2027.
Berenberg also displays his optimism regarding the financial health of the company. The broker expects turnover to increase by 6.2% organically (8.6% as published) to amount to 4.37 billion euros in the first quarter. The Defense & Security (D&S) division is expected to post organic growth of 9% this quarter.
Berenberg forecasts organic revenue growth of 5% in the aerospace sector and an organic decline of 1% in the digital identity and security (DIS) sector, reflecting continued weakness in the sector smart cards.
Additionally, the research firm anticipates a 2.4 percentage point contribution from group-level M&A, primarily reflecting the full three-month contribution from Imperva’s $3.6 billion acquisition in the field of cybersecurity, which was closed in December 2023.
Renewed tensions in the Middle East benefit defense stocks
Furthermore, defense sector stocks are rising following intensifying geopolitical tensions in the Middle East. This weekend, Iran launched more than 300 drones and missiles against Israel. This attack is a response to the bombing of the Iranian consulate in Damascus, Syria, on April 1, an attack that the Iranian regime attributed to Israel.
Yesterday, the G7 met urgently by videoconference to call for de-escalation.
Consequently, Dassault Aviation shares increased by 1.95% to 208.80 euros. In London, Bae Systems shares rose 2.37% to 1,349 pence.
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