(BFM Stock Exchange) – The Swiss Bank went to purchase on the electronics and defense group, this Monday, March 24, judging that its division can display long -term growth of more than 12.5% ​​in comparable data. This thanks to its critical positioning on electronic systems and integrated communications.

Strong increase in CAC 40 with a 78% leap since the start of the year, Thales found herself in the footsteps of the stock market.

Like other companies widely exposed to the Defense sector, the group chaired and led by Patrice Caine benefited from the multiple advertisements of military budgets in Europe.

In Germany for example, parliamentarians last week approved changes in budgetary rules necessary to implement an investment plan of several hundred billion euros in defense and infrastructure. While NATO rules recommend a threshold of 2% of gross domestic product (GDP) for military spending, several European leaders mentioned targets of 3% -4% or even 5%.

If these declarations aroused optimism on the stock market, the CEO of Thales wanted to be careful at the beginning of the month. Patrice Caine had declared to journalists to wait for these political announcements to turn into orders and therefore in sound and stumbling species. “The proof is in the pudding,” said the leader in English, which can be roughly translated by “we are waiting to judge on pieces”.

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Strong growth to come

In any case, UBS thinks that the action still has a field to continue its flight. The Swiss Bank noted its council on Thales for purchase against “neutral”, previously, while enhancing its course target at 330 euros, against 160 euros before, which grants a potential of 37.5% by the title, at the end of Friday evening.

On the Paris Stock Exchange, Thales won 2.8% following this change of opinion, and signs the highest increase in CAC 40.

UBS believes that the management of the company is far too cautious in its perspectives for its defense division. Thales expects to grow income in this division of 6% to 7% for the period 2024-2028 with an operating margin of 13%. But these forecasts were established last November, before the paradigm shift in the defense experienced in Europe in recent weeks.

UBS for its part table on an increase of 9% in 2025 and on an average growth of 12.6% over the period 2023-2030.

Relevant positioning

“We recognize the risk that the expectations of investors have exceeded those of brokers with regard to the speed with which the growth of the supercycle ‘of defense can be carried out, and we continue to see certain risks in civil activities, but we believe that these challenges are largely offset by the solid position of Thales to benefit from the’ Supercycle ‘of the Defense”, develops UBS.

UBS notes that Thales is particularly well positioned on electronic systems and integrated communications, two segments to which equipment expenses will be more and more turned.

These markets should increase by 10% by over the period 2023-2030. “We believe that our growth estimates could therefore prove to be conservatives (prudent, editor’s note) if the electronic portfolio of Thales takes a larger share of expenses, while European defense players also take shares to the Americans,” said UBS.

The Swiss bank recognizes that Thales also faces difficulties in its civil activities but it believes that these problems are “better and better understood by the market”. UBS believes that Thales will best achieve financial balance in its space activities but not to make them profitable.