1141 GMT - The defense sector will see margin expansion and strong earnings-per-share growth in the mid-term, BofA Securities says. Orders have been very strong over the past 18 months. BofA sees strong organic growth of 12% through 2026. This will support a sector EPS compound annual growth rate of around 23%. "Valuations are elevated vs. history, but the growth outlook is supportive," it says. The upcoming election in Germany could be positive for companies in the country, and Donald Trump's election is positive for NATO spending. BofA's top picks are Rheinmetall and Hensoldt. The U.S. bank also likes Leonardo, rated at a buy with a 30.5 euro target on the stock, and Babcock, rated at a buy with a 725 pound target. The two companies trade at significant discounts relative to peers and have progressing portfolios. U.S. exposure is complicated however by the growing narrative on budget efficiency. BofA downgrades BAE Systems and QinetiQ. (alistair.macdonald@wsj.com)
(END) Dow Jones Newswires
December 04, 2024 06:41 ET (11:41 GMT)
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