UBS announced on Monday that it had changed its recommendation on Thales shares to 'sell', from 'neutral', with a price target reduced from €140 to €115.
In a note published this morning, analysts believe that difficulties in the digital identity and security (DIS) and aerospace businesses were not well taken into account by the market.
The research firm points out that the identity and security division posted double-digit growth rates in 2022 and early 2023, but attributes this dynamism to semiconductor shortages and the resulting price hikes, both of which have since subsided.
As for the aerospace division, UBS points out that SpaceX has reduced the cost of launching satellites by 70% to 80%, which in its view points to 'structural' difficulties for Thales.
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Thales is one of the European leaders in manufacturing and marketing of electronic equipment and systems for the defense and security, aerospace, and transportation sectors. Net sales break down by product group as follows:
- defense and security systems (53.4%): C4I defense and security systems (control and monitoring systems, communication, protection, cyber-security, and other systems), defense mission systems, naval systems, electronic war systems, drones, air operation systems (air defense, air surveillance), ground defense systems and missiles;
- aerospace systems (28.4%): avionics equipment (cockpit, cabin multimedia, and simulation equipment), space systems (satellites, payloads, etc.);
- digital identification and security solutions (18.2%).
Besides, the group owns a 35% stake in Naval Group (manufacture of naval equipment for defense and nuclear energy sectors).
Net sales are distributed geographically as follows: France (29.5%), the United Kingdom (6.6%), Europe (24.8%), the United States and Canada (14%), Asia (9.4%), Near and Middle East (6%), Australia and New Zealand (4.4%) and other (5.3%).
THALES 
