AlphaValue's analysts report that Thales could stand out in the current defense cycle thanks to its exposure to radar, electronic warfare, and anti-drone systems, as Western militaries seek to rectify a costly imbalance between expensive missiles and low-cost threats.

The group is expected to benefit directly from NATO's ambitions to quintuple air defense capabilities, as its technologies serve as the "brain" for systems such as the SAMP/T.

Its model, centered on software and electronics, appears less capital-intensive than those of traditional industrial players, boasting high cash generation and a conversion ratio exceeding 100%.

Conversely, players exposed to heavy equipment must earmark 50% to 70% of their operating cash flow for industrial investment, the broker notes.

Another key catalyst, the "Bromo" project, aims to consolidate space activities with Airbus and Leonardo into an entity valued at 10 billion euros, in order to alleviate margin pressure. Slated to be operational by 2027, this transaction could structurally improve the group's profitability.

Despite a valuation deemed slightly above the sector average, Thales is thus considered a must-own asset due to its positioning in the critical technologies of modern defense, according to AlphaValue.

The broker confirms its "reduce" rating on the stock, with an unchanged six-month price target of 292 euros, suggesting an upside potential of approximately 9%. AlphaValue further forecasts a 2026 EPS of 9.75 euros and a 2027 EPS of 10.9 euros.