Indra Sistemas price target raised to EUR57 by UBS on defence contract wins

Investing.com - UBS raised its price target on Indra Sistemas SA (BME:IDR) (OTC:ISMAY) to EUR57.00 from EUR48.00 while maintaining a Buy rating following the company’s significant defence contract wins in Spain. The stock has been on a remarkable run, delivering a 245% year-to-date return and trading near its 52-week high of $29.70. According to InvestingPro analysis, Indra appears slightly overvalued at current levels, with a "GREAT" overall financial health score of 3.15.

The Spanish technology firm secured roles in 28 of the 30 defence modernisation programmes (PEMs) awarded by the Spanish government, exceeding market expectations. Indra will lead twelve programmes, including TESS and Hispasat, participate in consortiums for five more, and serve as a subcontractor on an additional twelve projects.

The Spanish government has offered zero-interest loans totaling approximately EUR14 billion to fund the ramp-up of these defence initiatives. Indra will receive EUR4.3 billion as a prime contractor and EUR3.6 billion as part of consortium arrangements. These contracts will likely boost Indra’s already solid revenue growth of 8.33% over the past twelve months. Investors tracking defense sector opportunities can access deeper insights with InvestingPro, which offers exclusive ProTips and advanced metrics for comprehensive investment analysis.

For the two contracts where values have been confirmed (MC3 and SCRT), the loan amounts represent 48% and 65% of the total contract values respectively. UBS has used these ratios to inform its estimates of activity ramp-up for the remaining projects.

Indra’s third-quarter results were described as "relatively uneventful" by UBS, with backlog remaining essentially unchanged quarter-over-quarter, including in the defence segment. The company is expected to provide more detailed guidance on these defence programmes at a Capital Markets Day scheduled for the second quarter of 2026.

In other recent news, Indra Sistemas has been active with several strategic developments. The company signed memorandums of understanding with SIRT and Ficosa to enhance its cyber-defense capabilities and collaborate on electro-optical equipment, respectively. Indra is also considering acquiring Tecnobit, a defense unit of Oesia, which generated €105 million in revenues and €15 million in EBITDA in 2024. This potential acquisition aims to strengthen Indra’s defense capabilities, as Tecnobit specializes in avionics, optronics, radar, and secure communications.

In addition, Berenberg has initiated coverage on Indra Group with a Buy rating, setting a price target of EUR41.00. The firm highlighted Indra’s strategic focus on the Aerospace and Defence sector, noting plans to allocate over 75% of its capital to this segment. These developments underscore Indra’s commitment to expanding its presence in the defense industry and enhancing its technological capabilities.

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