Morningstar Europe

Leonardo Shares Are Up 17% in 2026. Is This Defense Stock a Buy?

Leonardo (LDO) surged 17% in 2026, positioning itself among Europe’s top‑performing defense equities. The rally follows a stronger-than‑expected 2025 earnings release and reflects heightened demand driven by fresh Middle‑East conflicts and broader geopolitical tension. The company posted 11% year‑on‑year revenue growth, an 18% jump in operating profit and a 15% increase in new orders. All four divisions—helicopters, defense, electronics and security—contributed, while debt fell as cash flow improved. Morningstar analyst Loredana Marjoram highlighted an inflection point in Leonardo’s multi‑year shift from legacy hardware to integrated security, cyber and software solutions, noting better portfolio mix and capital discipline. Morningstar kept its €62.20 fair‑value target, citing structural defense spending and a pending joint‑venture to revive the loss‑making aerostructures unit. At roughly €60 per share, the stock trades near its all‑time high and fair‑value estimate, making the timing of a purchase ambiguous. Continued geopolitical flare‑ups could sustain order flow, but investors must weigh valuation proximity against the company’s strategic transformation.