Berenberg sees $686 bln increase in European defence budgets by 2035

RENK AG

10/03/2025 06:51

** Europe is "at the dawn of a decade-long rearmament cycle", which will drive medium-term earnings growth for European defence stocks at "incomparable" level with the past 30 years, Berenberg says

** Estimates $686 bln rise in Europe's defence budgets by 2035

** Says faster timeline appears likely given recent weeks' geopolitical events

** Adds, "Push by European governments to order European over U.S. military equipment offers a further 80% upside to order intake, on our analysis"

** As Germany plans "fiscal bazooka", Berenberg sees defence spending increasing to 2.6% of GDP by 2028, a "game changer" for its top pick Rheinmetall RHMG.DE and Renk R3NK.DE

** Upgrades Babcock BAB.L to "buy" from "hold", saying consensus estimates are too low

** Cuts BAE Systems BAES.L and Chemring CHG.L to "hold" from "buy" on U.S. defence budget uncertainty

 (Reporting by Anna Pruchnicka)

 ((anna.pruchnicka@tr.com))