02/14/2022 – 20:02
Regardless of the market considered, the geopolitical tensions in Ukraine it left its mark without the conflict degenerating into an exchange of fire between the NATO allies (on the side of Ukraine) and Russia. There is no war, for the moment, although the same feeling prevails that existed at the time of the cold war.
While trying to resolve the conflict through diplomatic means, military maneuvers as well as cross-statements from Putin and Biden (promising “quick and decisive” responses to a misstep on the contrary) warm up the steps. So while the commodity prices are skyrocketing With the prospect of tight global supply (like oil at a 2014 high), stocks are hurting.
However, some companies are doing better than their respective benchmarks so far this year. With few exceptions, companies that are engaged in the production of weapons or military equipment (in its entirety or with a notorious part of its activity) are rated positive in the 2022 cumulative. On the other hand, the expected sales in this arms industry for this year have not improved since the tension on the Ukrainian border has skyrocketed, so it seems that the sector which is devoted to the manufacture of military equipment it’s not believed the dispute.
According to market consensus compiled by FactSet, less than a quarter of the top 25 companies that produce defensive equipment improve their sales forecasts compared to what is estimated at the start of this year 2022. And those that do It does not represent an increase in any way. higher than 1% compared to the first estimates.
The same result appears if the estimated net profit for the whole of 2022 as of yesterday is studied with the forecasts made by experts at the beginning of this year. Only two companies, the French Dassault and the British BAE Systems, would benefit from an increase in your sales in the context of this escalation of geopolitical tensions in Eastern Europe.
Better evolution of the markets
As we have already anticipated, things change if we pay attention to their evolution of the stock market so far in 2022, whether your company is exclusively dedicated to the development of military equipment or technologies with war applications or whether it is only a branch of the activity of these companies. Concretely, the Japanese Mitsubishi (which, although it is not mainly dedicated to the development of weapons, draws 19% of its activity from this field) achieves the strongest increase of the year, with an advance of 11%, and still has a range of 7.5%, according to the consensus of signatures collected by FactSet.
For US defense contractor Raytheon, the first weeks of 2022 are also good for its share price. Last Wednesday, he reached his historic highs and, despite the fact that since then it has recovered by 2%, it has already increased by 9.6% for the year. In fact, six banks have reviewed their positions so far in February and only one of them has positioned itself as a hold, against the buy recommendation of the others. In addition, two of these analysis firms, Vertical Research and Melius Research LCC, have set their price target above that set by the consensus (104.56 euros per share), respectively at 110 and 111 euros.
In the rises, it is followed by the American company Lockheed Martin, with a 9.2% lead (with data at the close of the European market) in 2022. On Monday, five banks revised their recommendations on the action of the company . Three of them were positioned in the hold and two for purchase. His upside potential is 4.4% and its action obtains a target price of 408.89 euros.
On the side of the best opportunities, Teledyne has the best potential, of nearly 28%, recommending to the consensus of the firms which follow it and that FactSet gathers, the purchase, with a target price of 533.25 euros per share. French Airbus (which in 2021 derived 20.5% of its income from its defense section activity, according to Bloomberg)is up 3.5% this year and also has one of the highest upside potentials, 26.9%.
On the other side of the table, with regard to their evolution on the markets in 2022, Dassault and Textron stand out as those who fall the most. Dassault finds itself in the parks at 23%, against 10% lost by Textron. Despite this, both become attractive investments for the experts due to the potentials established by the group of analysts collected by FactSet, of 22.5% and 19.5%, respectively.