CSG’s €42 Billion Backlog Can’t Stop the Bleeding — Analysts See a 76% Rebound

Czech defense group CSG faces market skepticism amid Ukraine ceasefire hopes, but strong fundamentals and a €35.40 analyst target suggest upside potential.

The Czech defense group CSG is living a dual reality. On one side, its order book has swelled to €15 billion with a further €27 billion pipeline, its credit rating has been upgraded to investment grade, and nine out of ten analysts rate the stock a buy. On the other, its shares closed at €18.45 on April 29 — a 45% plunge from the January IPO high of €35.50 and a 22% monthly loss — making it the worst performer among major European defense names.

The disconnect stems from ceasefire hopes in Ukraine. Investors are rotating out of defense stocks, and CSG has been hit hardest: while Rheinmetall and Renk lost roughly 10% and Saab about 12% since the Iran tensions began, CSG shed nearly a third of its value. Yet the company’s management argues that European rearmament and NATO stockpile replenishment will continue regardless of any peace deal. Industry experts estimate a 10- to 15-year refill cycle ahead.

Investment-Grade Backing and a Growing Industrial Footprint

Moody’s upgraded CSG’s secured senior debt from Ba1 to Baa3 — the jump from speculative to investment grade — citing improved corporate governance post-IPO, a simplified capital structure, and a more conservative financial strategy. Fitch affirmed its BBB– rating with a stable outlook. Moody’s projects adjusted free cash flow of €500 million to €700 million annually for 2026 and 2027, with net debt staying below two times operating earnings.

The operational picture supports that confidence. Revenue surged 71.7% to €6.7 billion in 2025, with adjusted EBIT reaching €1.6 billion and a margin of 24.1%. For 2026, management targets revenue of €7.4 billion to €7.6 billion and an operating margin of 24% to 25%, with a medium-term goal of 26% to 28%. CSG claims to be Europe’s second-largest producer of medium and large calibers and the global leader in small-caliber ammunition — around 80% of sales come from defense markets.

The company is also expanding its industrial base. It is acquiring a 49% stake in Austria’s Hirtenberger Defence Systems, adding mortar systems to its portfolio. Simultaneously, CSG struck a broad cooperation deal with Poland’s PGZ to develop drone engines and guided missiles. Its subsidiary Excalibur International recently secured a contract worth nearly $2.5 billion to supply multi-layered air defense systems to Southeast Asia, while a European order for large-caliber ammunition came in at roughly €300 million.

The Q1 Test

CSG reports first-quarter results on May 20 — its first detailed financial statement since the IPO. One-time listing costs will weigh on the headline numbers, but adjusted figures should offer a clearer view of underlying performance. The average analyst price target stands at €35.40, nearly double the current level. J.P. Morgan rates the stock “Overweight” with a €40 target, citing CSG’s strong market position. Deutsche Bank initiated coverage with a Buy and a €35 target.

The key question is whether the Q1 numbers can convince the market that the discount is overdone. If the operating margin holds up despite IPO-related expenses, management will have a powerful argument against the current downtrend — and a reminder that Europe’s defense buildup is far from over.