Record order books and an aggressive expansion plan are painting two very different pictures of Hensoldt. The defence electronics group is drowning in new business – its backlog has swelled to an unprecedented €9.8 billion – yet the share price is stuck in a rut, trading roughly 12% below its 200-day moving average. Investors will be looking for clarity at the virtual annual general meeting on 22 May, where management will need to square a massive capacity investment with margins that are under short-term pressure.
The centrepiece of the growth push is a €1 billion programme to build new production space and upgrade manufacturing processes over the coming years. The need is urgent: first‑quarter order intake nearly doubled to reach just under €1.5 billion, meaning Hensoldt is winning three times as much new business as it books in revenue. But scaling up production of complex radar systems and optronics is a heavy lift. Analyst consensus for this year’s earnings per share has been cut from €1.51 to €1.33, and the group posted a net loss in the opening quarter. The payoff is expected later – forecasts see earnings jumping to €1.78 per share in 2026 as scale effects kick in.
To complement the hardware ramp‑up, Hensoldt is strengthening its software credentials. On 12 May it signed a memorandum of understanding with IBM Deutschland at the AFCEA fair in Bonn. The partnership centres on MDOcore, Hensoldt’s software suite for networking sensor and weapon data in real time. IBM will contribute its watsonx and automation expertise, particularly around sovereign AI and multi‑tenant data platforms. The goal is to cut technical risk in complex military systems and accelerate development cycles – a shift that aligns with Hensoldt’s broader ambition to occupy the digital layer of networked defence. The company plans to hire 1,600 new staff and is targeting full‑year revenue of around €2.75 billion with an adjusted EBITDA margin of 18.5‑19.0%.
Shareholders will vote on a proposed dividend of €0.55 per share, up from €0.50 last year, with payment scheduled for 27 May. The AGM agenda will also cover the software strategy and the bi‑national luWES project. But the elephant in the room is how the €1 billion expansion will be financed. Management is expected to provide more concrete details on funding to shore up confidence at a time when the stock is testing investor patience.
Should investors sell immediately? Or is it worth buying Hensoldt?
Technically, things look stretched. The shares ended the most recent Xetra session at €73.82, a near‑2% daily loss and roughly 12% below the 200‑day line. On a monthly view, the decline reaches nearly 8%. Short sellers remain active: AQR Capital Management holds a short position of 1.89%, down from 1.99%, while the Caisse de dépôt et placement du Québec has trimmed its exposure to 0.47% from 0.55%. The aggregate reported short interest stands at 3.45%. Despite the weak price action, the relative strength index sits at 82.3, signalling an overbought short‑term condition that often precedes a reversal – or a deeper slide.
Analyst sentiment is largely constructive but not unanimous. The consensus price target from 15 brokers is €90.70, with an upper bound of €101. Morningstar values Hensoldt at €110, citing its role as an integration hub in networked defence. J.P. Morgan is more cautious at €85, pointing to limited headroom on the EBITDA margin. At a trailing P/E of 42.27, the valuation leaves little room for operational missteps.
Supply chain risks add another layer. China placed Hensoldt on an export control list along with six other European firms, though the company says its germanium inventory covers demand through to the end of 2028. The gallium‑nitride supply is better protected: an agreement with United Monolithic Semiconductors covers 900,000 semiconductor devices, and Hensoldt aims to produce around 1,000 Spexer radar systems annually from 2027.
The immediate catalyst is the AGM on 22 May, followed by the half‑year report due 31 July. In between, a decision on a major Canadian project is expected. For Hensoldt to close the gap between a booming backlog and a depressed share price, the twin bets on hardware scale and software smarts will have to convince shareholders that the near‑term pain is worth the long‑term gain.
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