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Investing.com - Citi downgraded Saab AB (STO:SAABB) (OTC:SAABF) from buy to sell on Tuesday, while simultaneously raising its price target to SEK374.00 from SEK260.00.
The Swedish defense and aerospace company’s stock rating was lowered despite Citi forecasting a 23% EBIT compound annual growth rate from 2025 to 2030 for the defense manufacturer.
Citi’s valuation model for Saab uses a discounted cash flow analysis with a weighted average cost of capital (WACC) of 9%, medium-term growth of 9% between 2030-2034, and a long-term growth rate of 3% for terminal value.
The investment bank projects improving cash conversion for Saab, with its 2030 forecast at 81% and expectations for further improvement as capital expenditures eventually decrease following the current high-demand period.
The new valuation implies a 2025 estimated fair value enterprise value to EBIT multiple of 28x, according to Citi’s analysis of the defense contractor.
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