Hensoldt’s Cash Conversion Test Looms as €9.5 Billion in Orders Pile Up
Published on 07/18/2026 at 03:32 | Redaktion boerse-global.de
Berlin’s budget committee unlocked roughly €9.5 billion for 16 military procurement projects earlier this month, a package that includes four MEKO A-200 DEU frigates and all but guarantees Hensoldt a steady stream of radar contracts. The defence electronics specialist, whose TRS-4D sensor family is effectively pre-wired into the frigate programme, saw its shares close Friday at €75.86, up 4.37% on the day. That bounce trimmed the stock’s year-to-date losses but still left it about a third below the October 2025 peak of €115.10.
The move extends a recovery from the end of June, when Hensoldt touched a 52-week low of €63.12. Even after the latest leg higher, technical indicators remain strained: the shares trade below their 50-, 100- and 200-day moving averages, and the distance from the old high underscores how much ground has been lost. The annualised 30-day volatility of nearly 57% also marks Hensoldt out as a notably more jittery name than most DAX peers.
Despite the recent turbulence, the operational story has shown real momentum. First-quarter revenue jumped 25.57% to €496 million, order intake more than doubled to €1.48 billion, and the order backlog hit a record €9.8 billion. Management lifted its full-year free cash flow conversion target to about 50% of adjusted EBITDA, up from roughly 40% previously, while reaffirming the €2.75 billion revenue goal. Shareholders approved a €0.55 dividend for 2025, a 10% increase. The company also invested in software-driven defence by taking part in a funding round for start-up Project Q, which connects sensors and unmanned systems.
Yet the share price has not kept pace with the fundamental improvement. The divergence reflects deep disagreement among analysts. MWB Research downgraded the stock to “Sell” on 15 July, slashing its target to €62 and warning that the valuation, at roughly 18 times expected 2026 EBIT, leaves no room for disappointment – especially if the post-NATO summit lull kills the flow of new orders. By contrast, Jefferies analyst Chloe Lemarie raised her price objective to €94 on 10 July, keeping a “Buy” rating and pointing to Hensoldt’s entrenched position in air defence and military electronics.
Should investors sell immediately? Or is it worth buying Hensoldt?
The range of targets – from €62 to €94 – captures the central question hanging over the stock: can the record backlogs and elevated defence budgets translate into consistent cash generation? Germany has committed to spending €124.7 billion on defence in 2026, rising to around €152 billion by 2029. Hensoldt’s raised cash flow guidance suggests management believes the conversion is accelerating, helped by faster procurement cycles and higher customer advances. Still, some of the larger programmes have created complications; the company had to assess the impact of cancelling the F126 frigate programme on its medium-term capacity planning.
A periodic adjustment by BlackRock, the largest asset manager, has added a footnote. On 14 July, BlackRock reported its aggregate voting rights in Hensoldt at 4.99%, essentially unchanged, though the composition shifted: direct voting rights rose to 2.75%, while instrument-based holdings – including securities lending – fell to 2.24%. The stake remains just below the 5% notification threshold.
External factors also weigh on sentiment. The broader defence sector has seen heightened volatility, partly driven by valuation concerns and partly by macro headwinds such as the US-Iran tensions that rattle energy markets. A strategic EU-Ukraine drone production partnership has been highlighted as a potential opportunity for Hensoldt’s sensor and counter-drone systems, but no specific contract has been awarded.
Hensoldt at a turning point? This analysis reveals what investors need to know now.
The next hard data point arrives on 31 July, when Hensoldt releases its first-half 2026 results. The report will test whether the first-quarter acceleration can be sustained, whether the free cash flow upgrade is credible, and whether the stock’s two-speed narrative – strong operations versus cautious sentiment – can be resolved in one direction or the other. For now, the market is waiting for the books to do the talking.
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