After several weeks of range-bound movement, shares in Thales could enter into a new clear trend. The exit out of the current trading range could be the signal for a return of volatility.
Summary
● In a short-term perspective, the company has interesting fundamentals.
Strengths
● As regards fundamentals, the enterprise value to sales ratio is at 1.04 for the current period. Therefore, the company is undervalued.
● The average target price set by analysts covering the stock is above current prices and offers a tremendous appreciation potential.
Weaknesses
● For the last twelve months, the trend in sales revisions has been clearly going down, which emphasizes downgraded expectations from the analysts.
● For the past year, analysts have significantly revised downwards their profit estimates.
● The underlying tendency is negative on the weekly chart below the resistance at 78.02 EUR
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 
