Does Thai Battle Management Deal Mark a Strategic Shift for Leonardo (BIT:LDO) in C4/C5 Systems?

• In recent days, Leonardo DRS, a subsidiary of Leonardo, signed a contract with Chaiseri Defense Systems to supply an advanced Battle Management System to the Royal Thai Army, deepening its role in Thailand’s defense modernization.
• This deal underlines Leonardo’s push into higher-value C4 and C5 defense technologies and reflects growing international recognition from industry partners and analysts.
• Next, we’ll examine how this new Battle Management System contract with the Royal Thai Army may influence Leonardo’s broader investment narrative.

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Leonardo Investment Narrative Recap

To own Leonardo, you need to believe it can keep converting global defense spending and technology demand into profitable, higher quality contracts while managing its weaker aerostructures exposure and integration efforts. The new Thai Battle Management System deal supports the near term catalyst of expanding higher value C4/C5 activities, but it does not materially change the key risk around structurally loss making aerostructures and the execution burden from multiple integrations.

Among recent announcements, the memorandum of understanding with Airbus and Thales to pool space activities is especially relevant, as it points in the same direction as the Thai contract: moving further into complex, systems level solutions in areas like space, cyber and integrated defense electronics. Together, these developments speak to a thesis that depends on Leonardo steadily building higher margin, technology rich businesses while trying to contain the drag from legacy segments and integration risk.

Yet, against this promising shift toward advanced defense electronics, investors still need to be aware of the structural aerostructures weakness and the possibility that...

Read the full narrative on Leonardo (it's free!)

Leonardo's narrative projects €23.1 billion revenue and €1.5 billion earnings by 2028. This requires 7.2% yearly revenue growth and about a €0.5 billion earnings increase from €1.0 billion today.

Uncover how Leonardo's forecasts yield a €54.56 fair value, a 13% upside to its current price.

Exploring Other Perspectives

Twelve members of the Simply Wall St Community currently estimate Leonardo’s fair value between €39.73 and €98.06, highlighting very different expectations. Set against this spread, the push into higher value C4, C5 and space activities could be a key factor you weigh when thinking about how the business might perform over time.

Explore 12 other fair value estimates on Leonardo - why the stock might be worth over 2x more than the current price!

Build Your Own Leonardo Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Leonardo research is our analysis highlighting 2 key rewards that could impact your investment decision.
• Our free Leonardo research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Leonardo's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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