Investing.com -- Shares in Leonardo SpA (BIT:LDOF) climbed on Friday after analysts at UBS upgraded their rating of the Italian aerospace and defense firm to "Buy" from "Neutral."
In March, the state-controlled group presented a much-anticipated strategic revamp for 2024 to 2028 that included a push to strengthen its core businesses like helicopters and electronics. It also says it will invest in developing its artificial intelligence capabilities and leveraging opportunities in cybersecurity and space.
The move comes as the company is aiming to capture a projected uptick in military expenditures in Europe in response to a host of recent geopolitcal tensions, including the outbreak of war in Ukraine. Defense businesses like Leonardo are subsequently expected to see their margins expand -- and stock prices rise -- as military spending potentially takes up more room in European government budgets.
Milan-listed shares in Leonardo have now surged by more than 51% this year.
In a note to clients raising their price target for the stock to 30 euros from 16.60 euros, the analysts at UBS said the plan represents a "reasonable base case scenario."
"With a large apparent contingency in the Plan, we believe risk of surprise is equally weighted to the up and downside," they added.