Renta 4 yesterday revised its target price upwards from 18.6 to 24.2 euros, more than 30% above yesterday’s close. The company’s commitment to the defense business gives it strength for a bullish attack on the stock market, according to Iván San Félix. “It is well positioned to become the national champion of the Spanish defense sector in the coming years,” he notes. He is one of the most optimistic with the company, along with Carlos Treviño, from Santander, who agrees with his valuation and Richard Nguyen, from Société Générale, who sets it at 23 euros. They exceed the 20.37 euros of the consensus, which still gives it a potential of 10%.
“Indra’s great positioning and the strong increase in Defense spending expected worldwide lead it to accelerate its transition to become the national reference company in Defense and to be more active in coordinating multinational projects,” comments San Félix.
Although Indra’s exposure to the aerospace segment is limited, its commitment to offering comprehensive Defense services involves accelerating its presence in this area with purchases.
The company has presented a new strategic plan this month and has shown its intention to strengthen its positioning in air traffic and become a world leader. To do this, it will reinforce its commitment to the US and Asia Pacific and consolidate its leadership in Europe, the Middle East and Latin America.
Experts consider Indra’s decision to maintain control of its Minsait technology division to be correct, although it will now seek to focus its services on the most in-demand digital services and accelerate its entry into higher value markets. The combination of Defense and Minsait will allow it to take advantage of synergies in two strategic sectors with good prospects.
For analysts, Indra offers high income visibility, since its order book is around 6,776 million and covers the income forecast until 2026. Renta 4 foresees that the company will generate close to 600 million euros of free cash flow (after to pay dividends) until 2026 and points out that its debt is low and it can sell assets to finance the comparisons that its new plan needs. Indra is one of the Ibex values that has increased its target price the most in a month.