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Investing.com - Citi has significantly raised its price target on Thales (EPA:TCFP) SA (EPA:HO) (OTC:THLEF) to EUR284.00 from EUR168.00 while maintaining a Buy rating on the stock.
The substantial price target increase reflects Citi’s expectation of "sustained high single-digit growth for at least a decade" as European nations boost their defense spending.
Citi analyst Charles Armitage described this outlook as a "stronger for longer" theme, highlighting the anticipated benefits Thales would receive from increased defense budgets across Europe.
The new target price is based on a discounted cash flow valuation model that projects European defense spending will drive 9.4% profit growth for Thales through 2030, followed by a 9% medium-term growth rate for years six through ten.
Citi’s valuation model also incorporates a 3% terminal growth rate for Thales, which the firm notes is in line with expected nominal GDP growth.
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