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On Thursday, Jefferies began its coverage of Leonardo Spa, an aerospace and defense company, assigning the stock a Buy rating and setting a price target of EUR52.00. The new rating by Jefferies reflects a positive outlook on the company’s future performance and growth prospects. The market appears to share this optimism, with the stock delivering impressive returns of over 111% in the past six months. According to InvestingPro data, Leonardo’s market capitalization now stands at $27.47 billion, though technical indicators suggest the stock may be in overbought territory.
Leonardo Spa, known for its significant role in the Italian defense sector, which constitutes approximately 15% of its group sales, is expected to experience rapid growth in this area. Jefferies’ coverage highlights the company’s diversified operations as a key factor in mitigating risks associated with program-specific challenges. The company’s revenue growth of 13.49% in the last twelve months supports this positive outlook. InvestingPro analysis reveals 12 additional key insights about Leonardo’s market position and growth potential.
The company is currently at a strategic juncture, with plans to divest its aerostructures business, which has previously hindered its earnings. This move is anticipated to pave the way for a more robust financial performance. Additionally, Leonardo Spa is likely to gain from a new joint venture in land defense with Rheinmetall (ETR:RHMG), alongside potential consolidation in the European space sector, which could bolster its core business.
According to Jefferies, the group is poised to enjoy solid top-line growth. The firm suggests that the mid-term targets released by Leonardo Spa, projecting around 7% annual growth by 2029, may not fully capture the company’s potential. Jefferies’ analysis indicates that Leonardo could achieve these objectives approximately one year ahead of schedule, based on their estimates. In fact, the firm’s performance in 2024 has already matched the targets set for 2025 in the previous mid-term plan, underscoring the progress Leonardo Spa has made.
The positive coverage by Jefferies reflects confidence in Leonardo Spa’s strategic initiatives and its ability to outperform its financial targets, indicating a promising future for the company’s stock.
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