European defence stocks are the big winners on the stock market in recent days. This is due to the geopolitical development where Europe has been left out of the talks between Russia and the US regarding Ukraine, and the US has simultaneously been clearer that Europe must take responsibility for its own security.
SEB therefore makes an assessment in a market update that the previous analysis of Saab is now "overly cautious" and sees that the company can grow by 10 per cent or more annually.
Reality is changing so fast that it's uncertain to say that it will be one way or the other, but our old base scenario suddenly looks quite cautious, says the company's equity strategist Esbjörn Lundevall.
Trump's previous statements about NATO member countries contributing 5 per cent of their GDP, combined with Europe potentially needing to take on a greater defence role, can therefore give a significant growth boost to Saab. In an extreme scenario, SEB sees how the stock can rise from its current level around 300 kronor to over 500 kronor.
There are two main drivers for the defence industry market in Europe. One is the planned path to increase from 2 per cent of GDP to 3 per cent by 2033. On top of that, we have counted on a certain increase in the proportion of defence materials purchased locally here in Europe. Today, only 20 per cent of purchases are made locally, but we believe that proportion will increase, says Lundevall.
During today's trading, Saab continues to rise. By lunchtime, the stock has risen almost 1.5 per cent.
