JPMorgan raises Hensoldt stock rating, doubles price target

JPMorgan upgraded Hensoldt AG (HAG:GR) to Overweight with a new price target of €110, implying a 20% upside, citing a robust outlook driven by the company's projected organic sales CAGR of at least 15% through 2030 and EBITA margin expansion of 200 basis points; the analyst also adjusted EPS estimates for 2025-2027 and introduced estimates for 2028-2030, basing the revised target on valuation methodologies similar to Rheinmetall and RENK.

Analysis

JPMorgan has upgraded Hensoldt AG (HAG:GR) to Overweight from Neutral, with a substantial increase in the price target to €110 from €50, implying a potential 20% upside within the next 18 months. This revised outlook is driven by analyst David Perry's expectation of a robust five-year performance for Hensoldt, potentially followed by an even stronger phase from 2031 to 2035. Key to this optimism is Hensoldt's own guidance issued on May 7th, which projects an organic sales compound annual growth rate (CAGR) of at least 15% through 2030. Furthermore, the company is anticipated to achieve an EBITA margin expansion of approximately 200 basis points and maintain robust free cash flow. While earnings per share (EPS) estimates for 2025 and 2026 have been adjusted downwards by 8% and 2% respectively, the 2027 EPS estimate has been increased by 5%, and new EPS estimates have been introduced for 2028 through 2030. The new price target is predicated on applying significantly higher target multiples, aligning with valuation methodologies used for comparable companies such as Rheinmetall and RENK, both of which also carry an Overweight rating from JPMorgan.

Key Decisions for Investors

• Investors should consider the significant price target uplift and Overweight rating as a strong endorsement of Hensoldt AG's multi-year growth prospects, particularly its projected 15% organic sales CAGR through 2030.
• The anticipated 200 basis point EBITA margin expansion and robust free cash flow generation, if realized, could provide substantial shareholder value, warranting close monitoring of company execution against these targets.
• While acknowledging the near-term EPS estimate reductions for 2025-2026, the positive revision for 2027 and new long-term estimates suggest the investment thesis is primarily focused on sustained, long-duration growth beyond immediate fiscal periods.