Kepler Cheuvreux analyst Aymeric Poulain has made some bold predictions regarding the Swedish defense budget, anticipating an increase to 3.5% by 2030. This projection, higher than the expected 3% for the rest of NATO, could have significant implications for the defense industry, particularly for companies like Saab.
Poulain’s analysis suggests that this increase in defense spending could lead to a 6% rise in sales estimates for Saab by 2030, reaching a staggering 132 billion kronor, with the potential to hit 150 billion kronor as early as 2033. This optimistic outlook has prompted Poulain to raise Saab’s target price from 275 to 300 kronor, maintaining his recommendation to sell Saab shares.
Poulain’s confidence in Saab’s portfolio is evident as he describes it as one of the best in Europe. Despite the current stock price of 398 kronor being 33% above the new target price, Poulain believes that the market may be anticipating even faster or higher revenue growth, or perhaps not factoring in a potential regression to the mean for defense sector multiples as European defense spending reaches a new plateau in the early 2030s.
Meanwhile, Poulain’s colleague at Kepler, Magnus Råman, is feeling more optimistic as he issues a buy recommendation on H&M following their latest report. Setting a target price of 170 kronor, Råman remains bullish on the retail giant despite the adjusted ebit results falling short of consensus forecasts.
Råman highlights H&M’s acknowledgment of external factors, increased price reductions, and investments in customer offerings that impacted Q1 results, but anticipates a significant improvement in Q2. This positive outlook reflects Råman’s confidence in H&M’s ability to overcome challenges and deliver strong performance in the coming quarters.
Overall, these insights from Kepler Cheuvreux analysts offer a glimpse into the potential future landscape of the Swedish defense industry and the retail sector, providing investors with valuable information to navigate the evolving market dynamics with confidence and foresight.