On Thursday, Deutsche Bank increased its price target on shares of Leonardo Spa (LDO:IM) (OTC: FINMY) to €26.00, up from the previous €25.00, while reiterating a Buy rating on the stock.
The firm anticipates Leonardo's first-half results, which are scheduled to be announced on July 30 after the market closes, to highlight the company's order intake, although the second quarter may show a slight softening compared to the first quarter of 2024.
The bank expects Leonardo to report a 21% increase in order intake, a 6% rise in sales, and a 2% decrease in EBIT for the period. Free Operating Cash Flow (FOCF) is also projected to be lower year-over-year. The updated price target reflects adjustments for the timing of certain projects and the increased valuation of DRS and Hensoldt.
The analyst from Deutsche Bank noted that the key focus for the upcoming earnings release would likely remain on order intake, despite a forecasted softer performance in the second quarter compared to the first. Detailed expectations include a boost in order intake, growth in sales, and a slight dip in EBIT.
The report also highlighted the anticipated decline in FOCF compared to the previous year. Despite these mixed expectations, the firm maintains a positive outlook on Leonardo Spa, as evidenced by the raised price target and sustained Buy rating.
InvestingPro Insights
As Leonardo Spa (OTC: FINMY) approaches its earnings release, investors may find additional context in the company's current financial metrics. With a market capitalization of $14.36 billion and a P/E ratio standing at 12.4, Leonardo is trading at a valuation that seems modest relative to its near-term earnings growth. This is further underscored by a PEG ratio of 0.93, indicating potential undervaluation when factoring in expected earnings growth.
From a performance standpoint, Leonardo Spa has demonstrated a strong return, with a significant 35.27% price total return over the last six months and an impressive 106.46% over the past year. The company's revenue growth also remains robust, with an 8.0% increase over the last twelve months as of Q1 2024, and a notable quarterly jump of 20.76% in Q1 2024. These figures suggest a solid financial trajectory, aligning with Deutsche Bank's positive outlook and the "Buy" rating.
For those considering a deeper dive into Leonardo Spa's prospects, there are additional InvestingPro Tips available, including insights on the company's position as a prominent player in the Aerospace & Defense industry and its operational debt levels. With the potential for profitability this year, as analysts predict, these insights could be particularly valuable. Interested investors can unlock even more tips and benefit from up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription with the coupon code PRONEWS24. In total, there are 10 additional InvestingPro Tips available to guide investment decisions.
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