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What happens to Leonardo on the stock exchange after Thuringia and Saxony

What happens to Leonardo on the stock exchange after Thuringia and Saxony

A negative day in Piazza Affari at the beginning of the week for Leonardo, which dropped 7.23%: a rain of sales on all defense sector stocks in Europe; the uncertain political situation in Germany weighs heavily and could have repercussions on German foreign policy. Mini bounce today. Facts, numbers and insights

The election results in Germany yesterday depressed Leonardo's shares on Piazza Affari (-7.3%), weighing on the entire defense sector on the stock exchange.

Consistent sales on the aerospace and defense group led by Roberto Cingolani at the beginning of the week and on all defense sector stocks in Europe, the worst of the day on the lists, thanks – according to some operators – to the uncertain political situation in Germany which could have repercussions on foreign policy choices, Radiocor finds.

Specifically, Leonardo's shares lost 7.3%, returning to 21.3 euros and nullifying the recovery achieved during the month of August (+4.3%): trading volumes are consistent and equal to '1% of the capital. On the other stock markets, Rheinmetall fell by 3.5%, Hensoldt lost 2.7%, Mtu Aero Engines lost 1% in Frankfurt, Thales in Paris (-2.4%), Airbus (-1.3%) and Safran (-0.7%) alone among the most penalized, in London Rolls-Royce lost 5.6%, Bae Systems 2.8%.

Despite yesterday's news regarding the withdrawal of Airbus and Sikorsky (Lockheed Martin) from the tender for the new UK military helicopter leaving Leonardo UK as the sole bidder for the £1 billion programme, German political uncertainty (with the possibility that Berlin reduces the defense budget and military support for Ukraine) have knocked out the shares of the former Finmeccanica company.

Today, however, a mini rebound in Piazza Affari for the title of the Italian group active in defense and aerospace.

All the details.

RESULTS IN SAXONY AND THRINGIA AFFECT DEFENSE TITLES

What worries the market is the success of the far-right AfD in Germany, which won a regional election for the first time after the war, marking a further advance of populist forces that casts a shadow on the stability of the current ruling class .

The outcome of the regional elections held over the weekend in Saxony and Thuringia, although they refer to two not particularly populous lands, in fact accentuate the pressure on the federal government led by the social democrat Olaf Scholz given the affirmation of the far right of Alternative fuer Deutscheland and above all the surprise advance of the new left-wing party BSW of Sahra Wagenknecht who in foreign policy has declared herself close to the Russian positions and against the sending of Western weapons to Ukraine, adds Radiocor .

CURRENCY ON MILITARY AID TO UKRAINE?

The signals that emerged in the regional elections, according to the operators, have alerted the market which fears changes in direction on primary issues such as Ukraine and the military strengthening plan which leverages an important investment programme. Already in mid-August, the rumors reported by the German press about Berlin's desire to reduce the federal budget to be allocated to aid in Kiev, instead using the assets frozen in Moscow for this purpose, had caused more than one turbulence on the stock market in the defense sector.

THE CONSEQUENCES FOR LEONARDO

And it is precisely in Germany that the defense group led by Cingolani has considerable interests: this summer Leonardo turned to the German Rheinmetall to modernize the tanks and armored vehicles destined for the Italian Army.

On 3 July the Italian aerospace and defense giant signed a Memorandum of Understanding with the German defense group "aimed at the creation of a new joint venture which has the aim of developing a European-wide industrial and technological approach in the field of land defense systems".

Not only that, as MF reminds us, Leonardo is among the main shareholders of Hensoldt , a company active in Germany in the field of sensors for defense and security applications, with a portfolio in sensors, data management and robotics. The latter is owned by the German government and Leonardo, who hold an equal share of approximately 23%.

THE NEWS ON THE NMH RACE IN THE UK TAKE A SECOND PLACE

Yet, as already mentioned, just yesterday Leonardo's shares should have benefited from press reports on the news of the tender for the new UK military helicopter.

In fact, Leonardo UK remained the only company in the tender: rivals Airbus and Sikorsky (Lockheed Martin) did not submit offers. Last February 27, the British Ministry of Defense (MoD) officially started the negotiation phase of its New Medium Helicopter program (NMH) £1 billion ($1.3 billion) project that was due to culminate in three bidders submitting bids, a crucial step towards issuing a production contract in 2025.

Leonardo Helicopters UK, Airbus Helicopters UK and Lockheed Martin UK were the three players competing respectively with the AW149, the H175M helicopter (developed by Airbus together with rival Boeing) and the S-70M Black Hawk from Sikorsky (the Lockheed Martin subsidiary ). In the end Leonardo is the only one to have submitted a bid in the tender to replace the Royal Air Force's Puma support helicopters.

ANALYSTS COMMENT

“The news is not surprising, since Leonardo was considered favorite from the beginning” underlined the Intesa Sanpaolo research office (buy rating and target price of 26.1 euros confirmed on the stock), reports MF .

It remains to be seen, according to the Financial Times , whether the new London government, dealing with a significant spending review, will award the contract to Leonardo or cancel the program.

“It is possible that the required requirements will undergo further changes” warned Banca Akros, again quoted by MF . “The question is whether there is enough time to start again, because time is running out for Puma's existing fleet. At this point, it is almost impossible for us to understand if/when the helicopter contract will be awarded to Leonardo. The never-ending story continues” concluded Banca Akros (buy and tp at 29 euros).


This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/che-cosa-succede-a-leonardo-in-borsa-dopo-turingia-e-sassonia/ on Tue, 03 Sep 2024 12:05:51 +0000.