RBC, Barclays flag higher budgets, solid mid-term forecasts for European defence

Leonardo

11/08/2026 07:53

** RBC and Barclays initiate coverage of several European defence companies citing higher spending and solid mid-term forecasts
** RBC says European rearmament is set to drive defence spending growth of 16%/year to 2030, with the military equipment sector down 13% from its March peak creating an attractive entry point
** The broker sees catch-up related outgrowth in land and munitions as driving 20%+/year mid-term growth, flagging Rheinmetall (83% of sales) and CSG (97% of sales) as most exposed
** Barclays says earnings weakness remains concentrated in 2026, higher defence budgets and procurement activity should support stocks in the mid-term
** It flags Kongsberg for strongest combination of portfolio mix, margins and cash conversion, Leonardo for value and organic upgrades
** It upgrades Saab on international orders momentum
     
COMPANY / BROKER
RBC
Barclays
 
Old rating
New rating
Old rating
New rating
Saab SAABb.ST 
not rated
Sector perform
Underweight
Overweight
CSG CSG.AS 
not rated
Sector perform
not rated
Underweight
Rheinmetall RHMG.DE 
not rated
Outperform
Overweight
Overweight
Thales TCFP.PA 
not rated
Outperform
Equal-weight
Equal-weight
Leonardo LDOF.MI 
not rated
Outperform
Overweight
Overweight
BAE Systems BAES.L 
not rated
Sector perform
not rated
not rated
Kongsberg KOG.OL 
not rated
not rated
not rated
Overweight
Babcock BAB.L 
not rated
not rated
not rated
Overweight
Renk R3NK.DE 
not rated
not rated
not rated
Overweight

(Reporting by Maria Rugamer and Emanuele Berro)
((Maria.Rugamer@thomsonreuters.com; Emanuele.Berro@thomsonreuters.com))