European defence spending to continue regardless of Ukraine cease-fire talks outcome, Bernstein says

Dassault Aviation SA

06/01/2026 11:33

** Bernstein expects defence spending to persist, regardless of Ukraine cease-fire negotiations outcome, with key governments like Germany, France and the UK stressing the need to rearm

** The broker expects European NATO countries' military budgets to reach 2.8% of GDP by 2030 from current 2.3%

** Germany's Rheinmetall RHMG.DE remains its top pick as it should capture most opportunities with over 50% domestic market share

** Bernstein ups France's Thales TCFP.PA to "outperform", expecting a renewed focus on legacy divisions, boosted by key programs like Rafale and increased Airbus AIR.PA production

     ** Germany's TKMS TKMS.DE is "a difficult business in a supportive country", Bernstein says and ups it to "market-perform", citing fairer valuation after underperformance

** It cuts BAE Systems BAES.L to "market-perform" as U.S. exposure weighs on growth, and Dassault Aviation AM.PA to "market-perform", as the Rafale program's stability caps growth potential

COMPANY
CURRENT RATING
OLD RATING
CURRENT PT
OLD PT
Rheinmetall
Outperform
Outperform
EUR 2,000
EUR 2,050
Thales
Outperform
Market-Perform
EUR 275
EUR 259
Leonardo
Outperform
Outperform
EUR 60
EUR 55
BAE Systems
Market-Perform
Outperform
1,950p
2,250p
Dassault Aviation
Market-Perform
Outperform
EUR 310
EUR 319
TKMS
Market-Perform
Underperform
EUR 67
EUR 74

(Reporting by Leo Marchandon in Gdansk)

((leo.marchandon@thomsonreuters.com;

))