TKMS: The European Marine Powerhouse To Buy
Summary
TKMS AG & Co KGaA, a global leader in conventional submarines, is initiated with a Buy rating and a $140.18 price target, implying 20% upside.
TKMS benefits from surging defense demand and a robust €18.2 billion backlog, with annual sales growth projected at 12.3% and EBITDA growth at 19.4%.
Margins are expected to expand from 6.7% in 2023 to 11% in 2027 as operating leverage improves, despite variability in free cash flow due to milestone payments.
The spin-off from ThyssenKrupp enables TKMS to be valued as a focused defense company, with strong positioning across submarines, surface ships, and naval electronics.
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With Europe looking to accelerate its push for security autonomy, European defense stocks may look attractive. However, we also note that given the nature of investments required to support demand each defense contractor stock should be assessed
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This article was written by
Dhierin-Perkash Bechai is an aerospace, defense and airline analyst. Dhierin runs the investing group The Aerospace Forum, whose goal is to discover investment opportunities in the aerospace, defense and airline industry. With a background in aerospace engineering, he provides analysis of a complex industry with significant growth prospects, and offers context to developments as they occur, describing how they might affect investment theses. His investing ideas are driven by data informed analysis. The investing group also provides direct access to data analytics monitors. Learn more.
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