The growing geopolitical tension is giving support to the stock market performance of the defense sector, especially that of the Spanish companies Indra and Amper, according to the latest sector report on defense in Europe prepared by the financial analysts of Banco Sabadell.
In its review, the entity has improved the target price of Amper and Indra and reiterates its recommendation to overweight both stocks, while maintaining a "positive view" supported by the "strong" increase in defense budgets in Europe and order books at historical highs.
For Indra, the experts raise the target price to 73 euros per share, 4% more than in their previous estimate, which implies an upside potential of 12%. They justify this margin by the fact that the presentation of the new strategic plan, scheduled for next November 25, "should provide greater visibility on medium-to-long-term growth". Likewise, they underline that the company led by Ángel Simón "continues to post good results".
As for Amper, Sabadell increases its target price to 6.5 euros per share, which represents an increase of 3% compared with the previous forecast and a potential of 39%. The analysts attribute this improvement to the "strengthening" of its capabilities following the latest mergers and acquisitions (M&A) operations, which, in their view, place it in a "better position to capture growth in defense".
Within the same sector, the bank's specialists have also begun to follow the evolution of the German company Rheinmetall, listed on the Frankfurt Stock Exchange and part of the DAX 40 index.
In the case of this company, the analysts initiate coverage with a target price of 1,320 euros per share, to which they assign a potential of 26%. They consider it "one of the main beneficiaries of the strong increase in defense spending in Europe", a market in which it concentrates close to 83% of its sales. This dynamic has allowed it to reach a record order book and multiply its revenues by more than 5.5 times, in addition to enjoying "high visibility" of medium-term growth.
The experts at Sabadell add that Rheinmetall trades at a discount versus its peers and also highlight its "greater profile" of growth.