Key Highlights
Leonardo unveiled its mid-term strategy and objectives, which include doubling its profits by 2030, driving its stock price up by as much as 9%. Rheinmetall announced on Wednesday that it anticipates sales growth of 40% to 45% by 2026. Escalating global geopolitical tensions and the Iran war, now in its 13th day, have refocused market attention on defense contractors.
The Italian defense group Leonardo stated on Thursday that it is on a strong growth path. Similar to the benefits previously seen from the Russia-Ukraine war, European defense firms are securing increased business from the Iran conflict. Leonardo announced plans to double its profits by 2030; just a day earlier, its German counterpart Rheinmetall forecast sales growth of up to 45% this year. Both companies are currently managing record-high order backlogs. Leonardo's CEO, Roberto Cingolani, informed investors that warfare is becoming "faster and more dangerous," warning of rising hybrid threats that "amplify uncertainty and operational complexity." Rheinmetall stated that, against the backdrop of the Iran war, it is well-positioned to supply military equipment to the United States. CEO Armin Papperger told investors, "Over the next 10 years, the demand for our products will be enormous." However, following its guidance announcement, Rheinmetall's stock fell by 8%. Analysts at Jefferies described the outlook as "realistic but slightly conservative," suggesting investor expectations for the stock were overly high—its share price has surged by 1700% since early 2022.
The Iran war, now in its 13th day, has redirected market focus to the defense sector. Demand is rising for companies across the industry, regardless of their specific business focus. Leonardo positions itself as a digital defense company, emphasizing investments in defense electronics and networked combat platforms, such as the "Michelangelo Dome" air and missile defense system, analogous to Israel's "Iron Dome." Rheinmetall is a leading supplier of land warfare equipment like tanks and ammunition. Sweden's Saab specializes in fighter aircraft; UK-based BAE Systems, Europe's largest defense group by revenue and market capitalization, offers a product range spanning from nuclear submarines to Eurofighter Typhoon jets.
Between 2021 and 2025:
Rheinmetall, Leonardo, BAE Systems, France's Thales, Germany's Hensoldt, and Sweden's Saab saw an average annual revenue increase of 57%; New orders for these companies grew substantially over the same period, indicating future sales will continue to rise; Rheinmetall and Saab recorded the most significant growth, at 323% and 284% respectively (based on unaudited 2025 figures); The industry average for new order growth was 135%, while Thales saw a 27% increase.
Earlier this week, Barclays analysts upgraded Leonardo from Neutral to Overweight, stating that the U.S.-Iran conflict reinforces the thesis of a strong defense sector in the near term, with Leonardo exhibiting superior profit momentum compared to its peers. They added that Leonardo's diversified business portfolio and lower exposure to the Russia-Ukraine conflict provide it with greater resilience, even in the event of a future ceasefire.
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