Citi lifts defence firms Babcock, Leonardo and TKMS to 'buy' on upside potential

Babcock International

01/04/2026 09:43

** Citi raises European defence firms Babcock BAB.L, Leonardo  LDOF.MI and TKMS TKMS.DE to "buy", citing an upside after recent share price declines

** Its outlook and valuation of Leonardo and TKMS are unchanged, but there is "sufficient upside" to the stocks assuming European defence budgets reach 3.5% of GDP by 2035, the broker says

** Leonardo's shares have fallen around 13% since mid-March, with those of TKMS down by 22% since their peak in February - LSEG data

** Babcock trades near the bottom of Citi's valuation range and below PT, it says; stock down almost 25% since mid-January - LSEG data

** Citi reiterates PTs, while noting that for TKMS the rating is considered "high risk"

** It also started coverage of Rheinmetall with a "neutral" rating on Tuesday

COMPANY
RATING
OLD RATING
PT
Babcock
Buy
Neutral
1,554 pence
Leonardo
Buy
Neutral
69 euros
TKMS
Buy (high risk)
Neutral (high risk)
100 euros

(Reporting by Danny Callaghan)

((danny.callaghan@thomsonreuters.com))