This aerospace and defense stock is the new top pick at Jefferies By Investing.com
Jefferies upgraded Leonardo to Buy and named it its new top pick in European aerospace and defense, replacing Rheinmetall. The bank shifted to a 2028 sum-of-the-parts valuation, raised 2026 estimates, and cited Defense Electronics and air-defense exposure. Jefferies sees 30% upside to its price target and expects re-rating.
How this was made
The 30-second read
Why it matters
The most actionable element is the Leonardo upgrade to Buy and top-pick status, supported by estimate lifts and a stated 30% price-target upside, which can drive near-term relative flows. Other names are affected mainly through PT cuts or preference ranking changes rather than new company fundamentals.
Market read
Traders may use the Jefferies model and ranking changes to position for relative moves across European defense electronics, air defense, and civil aerospace names.
What to watch
The excerpt does not quantify risks to MBDA exposure, GCAP funding timing, or export approvals; those could dominate the re-rating thesis if they deteriorate.
Background
Jefferies revised its valuation approach across defense coverage to a 2028 sum-of-the-parts framework and re-ordered preferences toward defense electronics and air defense.
Ticker impact
Jefferies named Rolls-Royce its top pick within civil aerospace, citing expected guidance upgrades on Power Systems and aftermarket margins.
Moderately positive bias for RR on relative basis within civil aerospace.
The article provides a qualitative thesis but no new numeric guidance or PT change for RR in the excerpt, limiting conviction.
Market effects
Reinforces a rotation within European aerospace and defense toward defense electronics and air defense over land-based platforms, based on Jefferies’ valuation-horizon change.
Could influence European defense sector relative performance, with investors favoring names perceived as benefiting from air-defense and missile-system demand.
Limited direct global spillover, but defense-electronics re-rating narratives can affect cross-border defense ETF flows and peer relative valuations.
Counterpoint
Analyst top-pick changes may not translate into sustained outperformance if the broader defense de-rating persists or if execution timelines slip.
Key entities
- companyLeonardo
Upgraded to Buy and named Jefferies’ new European aerospace and defense top pick, with a 2028 SOTP re-rating thesis.
- companyMBDA
European missile systems manufacturer jointly owned by Airbus, BAE Systems, and Leonardo, cited as an upside driver.
- companyDRS
Majority-owned Leonardo subsidiary trading at a premium multiple in Jefferies’ SOTP discussion.
