In recent years, Europe’s governments and NATO members have embarked on a historic shift: a massive military build-up in response to external threats. Russia’s intensified war of aggression against Ukraine, repeated airspace violations, and hybrid attacks along the EU’s external borders have further accelerated this security shift. However, the expansion of defense capabilities is not limited to artillery or tanks — sensor technology, electronic reconnaissance, and air- and drone-based defense systems are also in high demand. This trend plays directly into the hands of Hensoldt, since modern warfare requires first to see, then to understand, and only then to counter.
The German manufacturer of defense electronics and sensor solutions — focusing on radar systems, optronic systems such as thermal imaging devices, as well as drone and air defense technology — is currently receiving orders in rapid succession. In the first half of the year, Hensoldt secured new contracts worth EUR 1.4 billion. This translates into a book-to-bill ratio of around 1.2, laying the foundation for further growth. Revenue in the first six months already increased by 11% to EUR 944 million. The second half of the year is expected to be even more dynamic: for 2025, the management board forecasts total revenue between EUR 2.5 and 2.6 billion, with an adjusted EBITDA margin of around 18%.
Beyond the current year, growth continues on an upward trajectory. The three-member Hensoldt management team, led by Oliver Dörre, expects to receive orders from the German government in unprecedented dimensions over the coming months. According to CEO Dörre, the federal government is placing orders “ten to twenty times larger than what we have seen in the past.” For example, Hensoldt is set to supply the core sensor and electronic systems for the next-generation reconnaissance vehicle “Luchs II.” In light of ongoing threats, Germany plans to raise its defense budget next year to EUR 108 billion — the highest level since the Cold War.
With these prospects, the company looks confidently to the future, regarding annual growth rates of more than 10% as realistic. By 2030, revenue is expected to nearly triple to around EUR 6 billion. To process the flood of orders, Hensoldt is investing heavily. Between 2025 and 2027, the company — 25.1% owned by the German state — plans to invest around EUR 1 billion. The new procurement and acceleration law will also support the company. “We hope that in the future we will also receive advance payments,” says Hensoldt. In the past, payments were only made upon delivery.
Analyst consensus assumes that rising revenues will also translate into higher profits. After an expected increase of 81.5% in earnings per share this fiscal year, double-digit percentage growth is projected to continue. On average, experts forecast a further 25% annual increase for the following two years.
The expected growth, combined with Europe’s tense geopolitical situation — which boosts public acceptance of defense spending as part of the debate on security and deterrence — is also reflected in Hensoldt’s share price. The stock has already risen more than 200% this year, recently breaking into the triple-digit range and reaching a new record high. Analysts are struggling to keep pace with their upward revisions of price targets amid the rapid rise. At present, the MDAX member carries a Hold rating, with the average 12-month price target at EUR 88 — about 20% below the current share price.
Given this, the upside potential beyond the EUR 100 mark may be limited. Yield-optimization products could be a fitting alternative. Leonteq has launched two new soft-callable BRCs offering a comfortable risk buffer of 41% and at the same time double-digit annual yields. The CHF-denominated version offers a maximum return of 12.20% p.a. if the stock consolidates, while the EUR version even promises 14.20% p.a. To achieve these maximum returns within the 15-month maturity period, no further price increase is required. Due to the embedded soft-callable function, the maturity may be shortened: every three months, but not earlier than six months, the issuer has the right to early redemption at 100%.
However, the EUR 100 mark may not necessarily be the end of the line for Hensoldt. Speculative investors can accelerate further upward movement. Leonteq’s broad range of mini-futures and warrants on the German defense stock offers leveraged participation. Not only long positions are possible — shorts can also turn potential pullbacks after the massive rally into disproportionate gains.
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