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Investing.com - Citi downgraded Hensoldt AG (ETR:HAG) from neutral to sell on Tuesday, while simultaneously raising its price target to EUR88.00 from EUR85.00.
The German defense electronics company faces a valuation challenge despite Citi’s projection of robust growth in European defense spending driving 15% annual growth through 2030.
Citi’s new price target reflects a 2025 estimated EV/EBIT multiple of approximately 31.6x and is based on a discounted cash flow valuation model that anticipates a 17.1% five-year profit compound annual growth rate.
The bank’s analysis incorporates 100% cash conversion, up from 95% in its previous assessment, along with a 29% tax rate and a 9% weighted average cost of capital.
For its longer-term outlook, Citi slightly reduced its medium-term growth rate projection to 11.4% for years six through ten, down from 12% previously, while maintaining a 3% terminal growth rate aligned with expected nominal GDP growth.
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