Deutsche Bank has moved Leonardo SpA into its buy category and increased the bank's price target on the Italian defence company to €70 from €57. The brokerage said the decision follows Leonardo's publication of medium-term targets for 2025-2030 and reflects improved visibility on earnings and valuation.
At the center of Deutsche Bank's reassessment are Leonardo's numerical targets: a 9% compound annual growth rate in sales and a 15.5% compound annual growth rate in EBITA through 2030. The broker described these objectives as credible and achievable, citing expected efficiency improvements that would contribute at the EBITA level.
Deutsche Bank noted that ongoing geopolitical tensions should help sustain order intake and sales for defence contractors more broadly and for Leonardo in particular. The broker pointed to the company's initial free operating cash flow projections for 2026-2027 as conservative but justified, and said the overall plan carries an element of built-in conservatism.
The analysis singled out certain business units that could outperform the baseline plan. Units identified include Leonardo DRS and the Helicopters division, where product mix and market exposure could lead to results above street expectations, according to the brokerage.
Deutsche Bank also highlighted the strategic importance of air-defence capabilities. It referenced Leonardo's target of securing €6 billion in orders between 2026 and 2030 for the Michelangelo dome, noting that conflict in the Middle East supports the rationale for that target.
While the upgrade signals confidence in management's guidance and potential operational leverage, the brokerage framed its assessment with an emphasis on conservatism in cash flow and overall projections. The expectation of sustained order flows is explicitly tied to geopolitical developments, which the broker sees as a supportive factor for Leonardo's medium-term targets.
Investors tracking defence and aerospace names may view the broker move and revised target as a noteworthy adjustment to Leonardo's valuation story, reflecting both the company's internal targets and external demand dynamics.