THALES : Oddo BHF raises its recommendation and target
June 20, 2024 at 03:54 am EDT
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Oddo BHF has raised its recommendation on Thales shares from 'neutral' to 'outperform', with a price target raised from €146 to €195.
According to the analyst, the stock should benefit from the upward EPS revision momentum, the CMD catalyst (14/11) which could highlight the extent of cyber's undervaluation, and a capital allocation strategy expected to be 'more shareholder-friendly from early 2025'.
Our estimates are now 2% to 8% above consensus in terms of EPS over the next 3 years, and between 9% and 20% in terms of FCF. We are convinced that the publication of a solid H1 2024 and the subsequent organization of a CMD will provide sufficient arguments for an upward revision of consensus estimates", adds the broker.
While Oddo BHF acknowledges that the French legislative elections could bring short-term volatility, the analyst does not foresee any scenario capable of altering its estimate trajectory.
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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%).