European aerospace & defence stocks fall as Jefferies cuts Safran, Leonardo

Leonardo SpA

21/04/2026 12:47

** European aerospace and defence .SXPARO index down as much as 2% in slightly higher market .STOXX even as Thales TCFP.PA beats expectations and following downgrades for Safran SAF.PA and Leonardo LDOF.MI

** Jefferies cuts Safran and Leonardo to "hold" from "buy", saying both now looked fairly valued in a more challenging environment

** Negative air traffic demand newsflow and higher fuel costs warrant more caution on aftermarket plays like Safran, it says, while CEO transition at the state-controlled Italian group could change its disinvestment strategy

** The broker forecasts a "lost year of air traffic growth" and sees the impact from the Middle East situation and fuel prices to become more material in Q3

** Defence remains Jefferies' preferred sector, but after a strong de-rating, land defence turns "most appealing", with Rheinmetall RHMG.DE and CSG CSG.AS now its sector top picks

** Jefferies raises Avio's AVI.MI PT by 5% to 43.5 euros on meaningful missile defence exposure, and Rheinmetall's by 10% to 2,220 euros

** By 1114 GMT, Thales down 4%, leading fallers in the sector, Safran down 2%, Leonardo down 3%, while Avio is up 4.3%

** Investors have cooled on European defence stocks as profit taking and stretched valuations collide with growing uncertainty over the future of warfare

 (Reporting by Olivier Cherfan and Anna Uras)

 ((olivier.cherfan@thomsonreuters.com ; anna.uras@thomsonreuters.com))