Hensoldt Q3 adjusted EBITDA beats forecasts, 2026 sales target raised

German defense electronics firm Hensoldt reported a 12% increase in adjusted EBITDA for Q3, surpassing expectations, with €144 million in the quarter, up from €104 million the previous year. Revenue reached €696 million, a 2% rise above analyst estimates. The company adjusted its 2026 revenue target to approximately €2.80 billion, slightly below the consensus of about €2.75 billion.

Adjusted EBITDA margin improved to 20.6%, up from 17.6% a year earlier. Hensoldt anticipates a new orders-to-sales ratio of 1.5 to 2 times. Analysts believe this suggests adjusted EBITDA of about €532 million, aligning with market consensus. Jefferies rates Hensoldt shares as a "buy" with a price target of €98. The company still expects the revenue target to be met, even if the PEGASUS contract isn't signed until early 2027, or if it's awarded in 2026.

Hensoldt projects €5.3 billion in orders by year-end, rising to €6.4 billion if the PEGASUS contract is secured in 2026. The firm reported a third-quarter order total of €752 million, 3% above consensus. Nine-month orders grew by 76.7% to €3.56 billion, driven by Eurofighter, Schakal, and Puma vehicle contracts, making the order backlog a record €10.37 billion.

Hensoldt anticipates further fourth-quarter orders in electromagnetic warfare, naval, land, and Eurofighter. The company's cash flow increased to about €32 million in Q3, surpassing the expected €38 million. For the nine-month period, adjusted free cash flow was an outflow of €104 million, a slight improvement from €119 million a year earlier, primarily due to higher advance payments.

Hensoldt adjusted its full-year indication for pass-through revenue, which was expected to be in the single digits, but now remains undisclosed. Optronics revenue grew by 38% YoY. Hensoldt's CEO, Oliver Dörre, stated that the company is "producing and delivering significantly more." The company plans to host a capital markets day in London on November 10.