THALES : Jefferies downgrades its recommendation to 'neutral
January 03, 2023 at 08:24 am EST
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Jefferies announced on Tuesday that it had downgraded its recommendation on Thales from 'buy' to 'hold', with a price target lowered from 140 to 135 euros.
After a 59% leap last year, which made it the best performer on the CAC 40 in 2022, the share's recovery process is now complete, says the broker in a note dedicated to the aerospace sector.
Jefferies also explains that it expects only 5.5% organic growth from the French equipment manufacturer in 2023, compared with +6% in the past financial year.
The broker also adds that it has lowered its forecasts for the Group this year due to component shortages in the aeronautics industry and recessionary pressures likely to affect its SIM card business.
While the spare parts market should benefit from the upturn in air traffic and firm sales prices, Jefferies points out that Thales shares are currently trading at a 12% premium to their historical average, a level it considers justified in view of the Group's resilience, but sufficient given the current economic context.
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Thales is one of the European leaders in manufacturing and marketing of electronic equipment and systems for the defense and security, aerospace, and transportation sectors. Net sales break down by product group as follows:
- defense and security systems (53.4%): C4I defense and security systems (control and monitoring systems, communication, protection, cyber-security, and other systems), defense mission systems, naval systems, electronic war systems, drones, air operation systems (air defense, air surveillance), ground defense systems and missiles;
- aerospace systems (28.4%): avionics equipment (cockpit, cabin multimedia, and simulation equipment), space systems (satellites, payloads, etc.);
- digital identification and security solutions (18.2%).
Besides, the group owns a 35% stake in Naval Group (manufacture of naval equipment for defense and nuclear energy sectors).
Net sales are distributed geographically as follows: France (29.5%), the United Kingdom (6.6%), Europe (24.8%), the United States and Canada (14%), Asia (9.4%), Near and Middle East (6%), Australia and New Zealand (4.4%) and other (5.3%).