Investment bank Citi has upgraded its recommendation for Saab to neutral from sell, while adjusting its price target to 527 SEK from 516 SEK following the recent downturn in the defense sector.
Concurrently, Germany's Rheinmetall has seen its rating raised from neutral to buy.
The bank suggests that concerns regarding a potential peace agreement in Ukraine and the financing of increased European defense spending are overblown, according to EFN, which has reviewed the research note.
'We believe that Russia is likely to remain a threat to Europe,' Citi wrote in the analysis.
Saab shares are trading flat in early deals, while Rheinmetall is up just over 1 percent.
SAAB AB is a world leader in the design, manufacturing and marketing of defense and security systems and equipment for military, space and civil sectors. Net sales break down by family of products and services as follows:
- electronic defense systems (33.4%): radars, sensors, submarine and terrestrial airborne surveillance systems;
- armament equipment and systems (25.6%): military equipment, missile systems, weapon systems, ammunition, armed forces identification systems, camouflage systems, etc. The group also provides security and defense solutions (combat systems, training, simulation, security and communication solutions, air and sea traffic management systems, etc.);
- aeronautical systems (24%): military aircraft, combat aircraft, avionics, etc.;
- naval systems (11.8%): submarines, combat ships, underwater mine detection systems, etc.;
- support services (4.2%): provision of services in the areas of systems development, integration and security, information security, communications, technical information, logistics, etc., and technological consulting in the fields of aviation, defense, telecommunications, etc.;
- other (1.1%).
Net sales are distributed geographically as follows: Sweden (41.1%), Europe (25.8%), North America (8.9%), Asia (7.4%), Latin America (4.3%), Australia (3.8%), Africa (0.6%), and other (8.1%).
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