TKMS Lifts Guidance a Second Time as Submarine Orders Deepen and Bernstein Turns Bullish

TKMS lifts FY outlook, Bernstein ups target to €125, as order book hits €20.1B and submarine EBIT quadruples.

The numbers had barely landed before the rating agencies moved. Within 24 hours of TKMS publishing its nine-month results on 12 August, Bernstein Research had torn up its previous assessment, lifting its price target from €76 to €125 and upgrading the stock from "Market-Perform" to "Outperform." Analyst Adrien Rabier pointed to a dramatic upward revision of his 2030 EBIT estimate — by 86 percent — as the trigger.

The market's response has been measured. The shares changed hands at €91.30 on Thursday, having gained 38 percent since the start of the year. Over the past month, the equity has added 14 percent, though the latest week brought a slight pullback of 1.7 percent. The stock remains 16 percent below its 52-week high of €108.80, reached on 14 August.

A Second Guidance Hike in Quick Succession

What prompted the analyst enthusiasm was a set of figures that showed momentum across nearly every division. Revenue for the first nine months of fiscal 2025/26 climbed 19 percent to €1,890 million, while adjusted EBIT rose 13 percent to €110 million. The adjusted EBIT margin came in at 5.8 percent.

Management responded by raising its full-year outlook for the second time. Revenue growth is now expected at 10 to 12 percent, a substantial upgrade from the previous 2 to 5 percent range. The adjusted EBIT margin is projected at up to 6.5 percent, while absolute adjusted EBIT guidance remains unchanged at €100 to €150 million. The medium-term targets — around 10 percent annual revenue growth with an EBIT margin above 7 percent — were reaffirmed.

The order book stood at €20.1 billion as of 30 June, giving a book-to-bill ratio of roughly twice annual revenue. That visibility into future years is rare in the defence sector, and it underpins the confidence behind the revised guidance.

Submarines Lead the Charge, Electronics Follows

Segment-level detail reveals where the growth is coming from. Submarines delivered revenue of €1,001 million, up 18 percent, with EBIT quadrupling to €46 million. Atlas Electronics grew even faster, with revenue up 28 percent to €612 million and segment EBIT rising 31 percent to €59 million. Surface Vessels was the laggard, posting 11 percent revenue growth but a flat EBIT of €30 million.

The pipeline behind those numbers is thickening. Norway has ordered two additional 212CD-class submarines, bringing its total to six. Germany has signed a framework agreement covering heavyweight torpedoes and associated equipment for the same submarine class. In Canada, TKMS has been named preferred bidder for up to twelve 212CD boats — a programme valued at over €15 billion alone — with contract signature targeted by the end of 2026. Germany has also placed an order for four MEKO A-200 DEU frigates with an option for four more, which the company describes as the largest surface vessel contract in its history.

Further afield, negotiations in India over six submarines under Project 75(I) are in their final stages, working with Mazagon Dock Shipbuilders. Brazil has signed a letter of intent for four additional Tamandaré-class frigates. A memorandum of understanding with Spain's Navantia on joint submarine projects was reached about a month ago, and the stock has risen 10.9 percent since.

CEO Oliver Burkhard has also pointed to new demand from the Gulf region for mine countermeasure capabilities in the wake of the Iran conflict. To handle the workload, TKMS is investing in its Wismar yard, where up to 1,500 new jobs are planned by 2029 for hybrid production of submarines and frigates.

The Costs of Expansion

Not every metric points upward. Free cash flow swung to minus €204 million in the first nine months, against plus €631 million in the prior-year period, as investments and customer prepayments from the 212CD programme weighed on the balance sheet. Order intake fell to €3,617 million from €8,598 million a year earlier, though that decline reflects an exceptionally high comparison base set by a large 212CD contract.

The company has also made a strategic choice about how to grow. In late July, TKMS withdrew from the bidding process for German Naval Yards Kiel, having submitted a non-binding offer in January. Management said it could not agree on economic terms with the owners. Instead, organic expansion at Wismar will take priority over acquisitions.

The stock's journey since its Frankfurt listing on 20 October 2025 — following the spin-off from ThyssenKrupp approved at an extraordinary general meeting on 7 August — has been one of steady accumulation. The revised guidance, the analyst upgrade, and the deepening order book all point in the same direction: TKMS is growing faster on both the top and bottom lines than anyone expected just a few months ago, and the management's willingness to raise targets suggests it sees this as a trend, not a one-off.