Exosens shares up 6% as target lifted to €47.20, rating upgraded to “hold”

Investing.com -- Kepler Cheuvreux raised French company Exosens’ target price to €47.20 after higher earnings forecasts tied to production capacity expansion and secured long-term orders, sending the stock up by 6% on Friday.

The brokerage increased the target from €33, a 43% rise, and lifted its recommendation to “hold” from “reduce” rating. 

Exosens shares closed at €45.35 on Dec. 18, implying a 4.1% upside to the new target. The France-based aerospace and defense components maker has a market capitalization of about €2.3 billion.

Kepler Cheuvreux said the revision followed a review of its financial model and midterm outlook, citing capacity additions in Exosens’ Amplification division and improved trends in its Detection & Imaging unit. 

The brokerage said market expectations around the company’s value prospects had proven accurate.

Growth in the Amplification division is now secured until the end of the decade following the signing of a large OCCAR contract and planned capacity increases. 

Exosens is adding 40% additional tube production capacity at a cost of €37 million over two years, lifting annual output from about 125,000 units to 170,000 units. 

The expansion follows earlier plans for a 25% capacity increase funded by €20 million of capital spending.

Kepler Cheuvreux said pricing on secured orders supports a rise in EBITDA margins to about 33% by 2027. 

The brokerage also noted that Exosens discontinued a loss-making microwave unit in the Amplification division, reducing expected 2025 revenue by €10 million to €11 million while improving the margin mix.

As a result, 2025 sales are forecast at €455.0 million, rising to €515.5 million in 2026 and €587.3 million in 2027. 

Adjusted EBITDA is projected at €143.6 million in 2025, €165.6 million in 2026 and €192.6 million in 2027. Adjusted earnings per share are forecast at €1.53 for 2025, €2.04 for 2026 and €2.46 for 2027.

The Detection & Imaging division showed stronger results due to increased defense demand. 

Kepler Cheuvreux said defense-related sales in the division, which were close to zero two to three years ago, accounted for more than 20% of divisional revenue in the first half of 2025 and could reach up to 25% by year-end.

The revised target price reflects a higher valuation multiple of about 14 times EBITDA based on a discounted cash flow model using a 9% weighted average cost of capital and 2% terminal growth rate. 

The valuation also factors in potential balance sheet leverage of up to two times net debt to EBITDA, which Kepler Cheuvreux said could add €1.4 per share in value.

At the new target, Exosens trades on an implied 2026 enterprise value multiple of 15 to 16 times EBITDA, which Kepler Cheuvreux said is consistent with levels currently paid for peers such as Theon and Teledyne, based on Reuters consensus data.