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Bank of America has upgraded its rating for German defense contractor Hensoldt from “Neutral” to “Buy,” signaling a strong conviction in the company’s role within Europe’s expanding air defense network. The bank established a price target of €88.50 per share, suggesting an approximate 32% upside from the recent trading level of €67.10. This optimistic stance comes after a period of weakness for the stock.
Solid Order Book Offsets Near-Term Earnings Pressure
The rationale for the upgrade is supported by the firm’s recently published 2025 annual report. While the net consolidated result declined to €86 million from €106 million a year earlier—a drop analysts attribute to a higher tax burden and investments in capacity expansion—the order picture is robust. New orders surged to €4.71 billion, a significant increase from €2.90 billion in the prior year. This has bolstered the total order backlog to €8.8 billion, providing substantial revenue visibility for the coming years.
Hensoldt, a key supplier of radar sensors and electronic warfare systems for platforms like the IRIS-T SLM and the Eurofighter, is positioned to benefit from rising demand across the continent for such advanced defense technology. Despite the lower net profit, the company plans to increase its dividend to €0.55 per share.
Strategic Investments Pave the Way for 2026 Targets
Management has outlined ambitious goals for 2026, targeting revenues of around €2.75 billion and an adjusted EBITDA margin between 18.5% and 19.0%. To achieve this, several strategic initiatives are underway. These include the expansion of radar production facilities in Ulm, the commissioning of a new logistics center, the efficiency-driven “Operations 2.0” program, and the integration of the Dutch optronics specialist Nedinsco.
From a technical analysis perspective, the shares are trading notably below their 200-day moving average, a level market technicians often view as a potential support zone. For investors, the confirmed 2026 guidance and the massive order backlog are likely to serve as key focal points, offering clarity on the company’s medium-term trajectory amid its current transformation phase.
