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Investing.com - Barclays initiated coverage on Swedish defense company Saab AB (STO:SAABB) with an Underweight rating and a price target of SEK395.00 on Tuesday.
The investment bank cited Saab’s "stretched valuation" and relatively small scale as key factors in its cautious stance, suggesting risks are "skewed to the downside" despite increased demand for the company’s defense portfolio.
Barclays noted that Saab’s high exposure to Sweden, which accounts for approximately 40% of group revenue, provides a stable foundation but limits growth potential compared to peers with greater exposure to faster-growing European defense budgets like Germany’s, which represents only 5-6% of Saab’s revenue.
The research highlighted persistent margin pressures in Saab’s Aeronautics division, which constitutes 25% of the group’s business, along with intense competition in the fighter jet market and negative cash flows within this segment.
While acknowledging that Saab delivers "world-class products" in its Dynamics and Surveillance businesses, Barclays concluded that these strengths are already fully reflected in the current share price.
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