Weekly Financial Report – Leonardo S.p.A. (LDO.MI)
Date: September 24, 2025
Prepared by: Rennie
1. Executive Summary
- Leonardo S.p.A. shares (LDO.MI) recently traded around €22.30, extending YTD gains above +40%.
- Defense sector remains strong, supported by geopolitical tensions and rising EU/NATO defense budgets.
- Leonardo has outperformed the broader FTSE MIB index, reflecting investor confidence in its backlog and contract pipeline.
- Risks include Italian fiscal tightening, potential EU budgetary constraints, and execution risks on large contracts.
2. Macroeconomic & Geopolitical Overview
- European Central Bank (ECB): Rates remain high, affecting overall liquidity but with limited direct impact on defense names.
- Geopolitics: Ongoing Ukraine conflict and Middle East tensions drive demand for aerospace and defense systems.
- Italy: Rome is prioritizing defense spending within the 2025 budget, in line with NATO commitments to 2% of GDP.
3. Market Performance Review
| Asset / Peer | Weekly % | YTD % | Comment |
|---|---|---|---|
| Leonardo (LDO.MI) | +2.1% | +41% | Outperformed FTSE MIB |
| FTSE MIB Index | +0.8% | +18% | Broad Italian equity benchmark |
| Airbus (AIR.PA) | +1.5% | +28% | Strong commercial + defense exposure |
| BAE Systems (BA.L) | +2.3% | +37% | UK peer benefitting from MoD contracts |
| Lockheed Martin (LMT) | +0.9% | +12% | US peer; valuation premium remains |
4. Options & Flows
- Options activity on Leonardo remains thin vs US peers; liquidity limited.
- European Defense ETFs (e.g., iShares MSCI Europe Industrials) show continued inflows.
- Volatility on Leonardo (30-day implied) is modestly below its 12-month average.
5. Insider & Congress Trading
- Insider trading: No major management share purchases/sales reported in September.
- Congressional trades (US): Filings show US lawmakers increased holdings in defense contractors (LMT, RTX), which indirectly supports sentiment for European defense equities.
6. Top News & Events Recap
- Leonardo announced progress on the Eurofighter Typhoon program, alongside Airbus and BAE Systems.
- Italian government reaffirmed defense budget growth for 2025, boosting sentiment.
- Strategic partnerships in space and cybersecurity segments expanded Leonardo’s diversification.
7. Forward Outlook
- Earnings calendar: Leonardo Q3 results expected in early November.
- Sector outlook: EU/NATO procurement meetings in October may outline additional orders.
- Macro risks: Italian parliament budget debates could influence defense allocations.
8. Strategy & Risk Scenarios
- Bull Case: Rising EU defense budgets + successful execution of backlog → price target €25.00.
- Bear Case: Italian fiscal tightening delays contracts → retracement toward €20.00.
- Hedging Idea: Pair long Leonardo with short FTSE MIB banks exposure to reduce Italian macro risk.
Appendix
- Charts: Leonardo share performance vs FTSE MIB YTD.
- Contract pipeline summary (defense, aerospace, cybersecurity).
- Historical multiples vs European defense peers.