Goldman Sachs initiates Hensoldt at Neutral with €85 target, cites valuation

Goldman Sachs has initiated coverage of Hensoldt Ag with a neutral rating and a €85 price target, citing strong growth potential from Europe's defense spending cycle reflected in the company's valuation. The target represents approximately 2.9% upside from the current €82.58 share price. Goldman highlights Hensoldt's strong fundamentals in radar, electronic warfare, optronics, and integrated sensor systems, particularly for air and missile defense and counter-drone capabilities, with 63% of the company's 2025 revenue coming from Germany.

The company's backlog reached a record €10.36 billion at the end of H1 2026, up 17% from year-end 2025, and the order intake surpassed €4.71 billion in 2025, with a 2.4 times book-to-bill ratio. Goldman expects 2026 revenue of €2.8 billion and adjusted EBITDA of €530 million, with a forecasted compound annual growth rate of 22% to reach €1.2 billion by 2030.

While Hensoldt's shares already reflect much of the anticipated earnings growth, Goldman sees potential for further upside if backlog conversion speeds up, margins improve, or cash generation enhances. Conversely, production and supply-chain issues, program delays, adverse product mix, and weaker working-capital conversion could negatively impact the shares.

Goldman projects revenue growth from €2.46 billion in 2025 to €5.8 billion by 2030, a 19% CAGR, slightly below Hensoldt's €6 billion target for 2030 due to potential future M&A transactions.