Barclays has elevated Leonardo to an Overweight rating from Equal Weight and increased its price target to €68 from €53, pointing to what it describes as stronger earnings momentum and structures within the business that could prompt investors to assign a higher valuation to the defence group.
Analysts at the bank said their updated projections imply a 13-14% uplift to long-term EBITA estimates as Leonardo is positioned to gain share in European defence markets and to benefit from firmer demand in the United States. Barclays also anticipates that free cash flow will roughly double over the next five years, reaching about €2.05 billion by 2030.
Barclays singled out Leonardo’s aerostructures unit as a current drag on both margins and investor sentiment. The brokerage noted that a potential partnership or the divestment of that unit could remove working capital pressure and clean up the group’s industrial profile. Analysts expect such a transaction could occur in the first half of 2026 but emphasized that timing is uncertain.
In Barclays’ view, resolving the aerostructures issue would leave Leonardo as a "cleaner defence story" and could justify a higher valuation multiple. The bank also highlighted the company’s diversified portfolio as a stabilizing factor, noting that less than 0.5% of exposure is tied to Ukraine and roughly 6% to the Middle East, primarily through aircraft and helicopter activities. Around 25% of Leonardo’s revenue is derived from the United States.
On valuation, Barclays said the shares trade at about 13 times forward enterprise value to EBIT, which is near a 14% discount to the sector average. While the bank still expects Leonardo to grow more slowly than some defence peers over the coming five years, it assessed that the probability of positive earnings surprises has increased.
Under Barclays’ forecasts, Leonardo could produce about €3.4 billion in EBITA by 2030, with an 11.9% margin, a level described as slightly ahead of consensus. In an upside scenario, analysts estimate free cash flow could reach between approximately €2.2 billion and €2.3 billion.
The company is scheduled to present its industrial plan on March 12.
Clear takeaways
- Barclays upgraded Leonardo to Overweight and lifted the price target to €68 from €53, citing improved earnings momentum and potential remedies to its aerostructures business.
- The bank projects long-term EBITA upside of about 13-14% and expects free cash flow to roughly double to about €2.05 billion by 2030, with upside scenarios of €2.2-2.3 billion.
- Valuation sits at roughly 13 times forward EV/EBIT, near a 14% discount to the sector, while the company receives about 25% of revenues from the U.S. and has limited exposure to Ukraine and moderate exposure to the Middle East.