Saab shares pop 14% on profit beat amid EU, NATO defense splurge
The Swedish Air Force Saab Jas 39 Gripen Jetfighter participates in the NATO exercise as part of the NATO Air Police mission in the dominant airspace of the members of the alliance on 4 July 2023.
John Thys | AFP | Getty Images
The shares of the Swedish defense giant Saab jumped on Friday morning after reporting the strong profit and sales growth than expected for the second quarter.
Stocks were last traded 14.3% higher at 7:01 ET
SAAB’s operating revenue for the second quarter, a 49% leap and a rhythm expected by the analysts who participated in the survey by LSEG, pointed to 1.98 billion Swedish Kronor ($ 200 million).
Three -month sales increased better than a year of 30% annually.
The company also carried out its 2025 view on Friday and increased its full -year organic sales growth projection from 12% to 16% to 16% to 20%.
According to LSEG data, Saab’s shares have increased by 131% since the beginning of the year.
The stock is one of the many people who benefit from a wide regional coercion in the European defense field to increase security budgets.
On Wednesday, the European Commission submitted an offer for a 2 trillion euro budget, which would include a significant increase in financing for defense. It comes as a part of what Bloc labels the “restructuring period” of Europe, which has already revealed the plans to mobilize 800 billion euros ($ 928 billion) to assist the national security expenditures of member states.
Meanwhile, members of the NATO Military Alliance recently agreed to increase the defense expenditure targets to 5% of gross domestic product (GDP).
SAAB CEO Micael Johansson, CNBC’s “Squawk Box Europe”, said that the activity in the European defense market was “really high”, but Saab is a “large portfolio that supports the demand on the market.
“What you see in this quarter is that we have increased dramatically,” he said. “We currently have a series of campaigns, there is a great interest and recently has increased a bit.”
US President Donald Trump forced the ownership of his own safety to Europe, the triggered regional defense expenditure increased, he said he should have the opportunity to support the defense sector.
“The US administration rightly says that we should step into Europe and take great responsibility for our own safety.” He said.
“So, many countries are now increasing their own defense industries. Of course, in terms of competition in the market, of course I want to see a flat playground, but I think we need to buy more Europe – we need to have a strong transatlantic connection… We must have this powerful European defense industry to manage the aggressive neighbor towards the east.”
In a note on Friday, Citi Analysts acknowledged that the company has a “very strong quarter”, while Saab shares reiterated the “sales” notes.
Nevertheless, they added that the valuation models are still pointing to the target price of 374 Sweden Krona. After the rally on Friday, it will indicate a decrease of approximately 31% of these existing prices.
“Currently there is a strong acceleration in European defense expenditures.” They said. “We estimate that GDP will peak in 3.5% of GDP, and we doubt that the governments have more cash use.”
