With new wars appearing, is THALES a good buy?Pros:
Massive scale & diversified contract base
-€18 billion in annual revenue, 50+ years in defense—among Europe’s largest contractors .
Secured key recent contracts:
-NATO NCOP/BMD Phase 3 missile-defense and awareness system (ongoing since 2012, renewed in early 2025) .
-NATO NCIA IT modernization contract (~€100 million+, six years) awarded via Proximus consortium .
-Portuguese “ForceShield” VSHORAD air-defense system via NSPA .
These show active involvement and political support in large, multiyear NATO/U.S.–backed defense programs.
Exposure to rising defense budgets
-With the new 5% NATO defense-spending pledge, countries are stepping up military expenditures—boosting demand for Thales’ radar, missile, and communication systems .
-Positioned to capture billions more as defense budgets grow across Europe.
Cons & Risks
Size limits rapid gains
-Large-cap stocks like Thales require major updates to move—tens or hundreds of millions in net new orders… a small contract won't cut it.
-Expect slower reactions than mid-caps like Hensoldt or THEON.
Valuation sensitivity
-With high valuation levels, share price can dip on a valuation reset, even with decent results.
-A disappointing earnings quarter or negative macroeconomic news could chip away at gains.
Execution & political headwinds
-Big contracts, like NATO BMD, are subject to delays or cost overruns, affecting profitability.
-Geopolitical sensitivities (e.g., with Russia, Turkey, internal EU politics) can jeopardize projects or license approval.
D) Mixed analyst sentiment
-Although consensus leans positive, there are also Hold and Sell recommendations—some analysts worry about long product cycles and execution risks .
-Disclaimer: This analysis is for informational and educational purposes only and does not constitute financial advice, investment recommendation, or an offer to buy or sell any securities. Stock prices, valuations, and performance metrics are subject to change and may be outdated. Always conduct your own due diligence and consult with a licensed financial advisor before making investment decisions. The information presented may contain inaccuracies and should not be solely relied upon for financial decisions. I am not personally liable for your own losses, this is not financial advise.
