Leonardo Earnings: Another Strong Performance; Increasing Our Fair Value on Higher Defense Spending

Narrow-moat Leonardo reported strong results for first-quarter 2024, driven by defense electronics and helicopters. We increase our fair value estimate to EUR 27 from EUR 23 to account for increased long-term growth. We're increasing our long-term growth rate from 3% to 5% to account for an acceleration of European countries' commitment to increase their defense spending. Overall, the latest industry estimates show a cumulative increase of over $500 billion for the next decade compared with last year's predictions.