Morgan Stanley issued a sweeping revision to its coverage of two Nordic defence contractors, turning bullish on Sweden's Saab AB while taking a more cautious stance on Norway's Kongsberg Gruppen ASA.
On Tuesday the bank upgraded Saab to "overweight" from "underweight" and raised its one-year price target to SEK 700 per share, up from SEK 540. In parallel, Morgan Stanley downgraded Kongsberg to "underweight" from "equal-weight," lowering its target to NOK 330 from NOK 310.
Market context and immediate reaction
Saab shares closed at SEK 587.70 on July 6, leaving approximately 19% of implied upside to the new SEK 700 target. By contrast, Kongsberg's revised NOK 330 target is close to current trading levels and represents effectively flat upside.
The broker attributed its divergent calls to a combination of visible order flow and differing prospects for earnings upgrades. In Morgan Stanley's words, "Saab offers clearer upgrade risk from strong order momentum not yet reflected in cons, alongside a ytd derating."
Saab: backlog, contracts and model changes
Morgan Stanley now sees Saab's 2030 earnings per share roughly 30% above Bloomberg consensus. The bank said consensus has yet to fully incorporate several items, including a naval divisional restatement, the SEK 47 billion Polish submarine contract received on June 29, and a SEK 25 billion Ukrainian Gripen award.
Recent conversions of orders raised Morgan Stanley's estimate of Saab's backlog to more than SEK 300 billion by the second quarter of 2026. Within that backlog the broker identified around SEK 130 billion in visible contracts received recently covering Gripen, GlobalEye, A26 submarines, GBAD/C-UAS, Giraffe and NLAW.
Beyond those awards, Morgan Stanley pointed to an additional pipeline of roughly SEK 200 billion in Gripen and GlobalEye opportunities alone, adding that this figure "still understates Saab's medium-term demand opportunity."
To reflect the stronger top-line outlook, Morgan Stanley lifted its assumed 2030-35 sales compound annual growth rate for Saab to 11% from 8%, held its weighted average cost of capital at 7.5%, and expanded valuation multiples by about 10%. The broker combined a discounted cash flow and sum-of-the-parts approach to arrive at the blended SEK 700 target. For 2025-30 the bank now forecasts a 19.1% sales CAGR for Saab versus a consensus 16.5%.
Kongsberg: guidance, dependency on orders and margin risk
On Kongsberg, Morgan Stanley described the company’s recent capital markets day as having "largely confirmed what the market already expected." The firm highlighted that Kongsberg's new revenue targets of NOK 100 billion by 2029 and NOK 150 billion by 2033 sit below prevailing consensus assumptions, which Morgan Stanley stated are NOK 105 billion for 2029 and NOK 120 billion for 2030. The broker characterised those consensus figures as "5% and 10% respectively above new company sales trajectory, suggesting limited scope for revenue-led upgrades."
Morgan Stanley also highlighted that about 60% of Kongsberg's cumulative 2026-30 revenues remain contingent on future order intake, creating execution dependence on securing new contracts. The firm warned of margin pressure as well, noting a potential downside to consensus margin assumptions. While consensus projects an 18.9% margin for 2030, Morgan Stanley's own 2030 EBIT margin forecast is 16.9%.
The broker further noted that following an approximately 50% year-to-date share-price move, Kongsberg currently trades at roughly a 50% premium to the sector, leaving "limited appetite for disappointment."
Near-term catalysts
- Saab faces several events that Morgan Stanley identified as near-term triggers: the NATO Summit on July 7-8 where GlobalEye selection could be announced, second-quarter results scheduled for July 17, and a potential capital markets day in early 2027.
These items could influence how quickly the market re-prices Saab given the broker's view of underappreciated order momentum and earnings upside.