Thales on Track to Meet Full-Year Guidance; Fair Value Estimate Unchanged

Narrow-moat Thales reported organic order intake and sales growth of 28% and 6%, respectively for the first nine months of the year, with the order intake now back above 2019 levels. The figures exclude the transport segment, which is up for disposal. Several large military and space orders booked year to date are the key driver behind the growth in order intake, while the civil aeronautics business remains depressed. Guidance for the full year remains unchanged, with the group expecting midpoint sales (excluding the transport business) of EUR 16 billion and an EBIT margin of 10%, which is in line with our estimates. The main sales and profit drivers over the medium term will be the continued momentum of the defense and space markets and gradual recovery of the civil aeronautics and biometrics markets. We maintain our EUR 115 fair value estimate and believe the shares are offering good value at current levels.