Citi Identifies Value in Leonardo Shares Following Recent Pullback

Citi upgrades Leonardo to 'Buy,' citing a low earnings bar and upcoming catalysts. Analysts see upside to €69 target, with Q1 results and shareholder meeting due in May.

Analysts at Citi have upgraded their rating for defense and aerospace group Leonardo to "Buy," framing a recent retreat from record highs as a potential entry point for investors. This reassessment arrives ahead of a significant corporate calendar in early May, featuring quarterly results and the annual shareholder meeting.

A Reverse Valuation Model Suggests Upside

The upgrade is grounded in Citi's proprietary "What's priced in?" analysis. This reverse discounted cash flow model calculates the level of future earnings growth already reflected in the current share price. For Leonardo, the model implies the market is pricing in a compound annual growth rate (CAGR) of just 5% for profits between 2030 and 2035. Citi's research team believes this hurdle is readily achievable, particularly given anticipated procurement budgets in Leonardo's core Italian market. The firm has maintained its price target of €69 per share.

Sentiment among covering analysts remains favorable. Out of 18 market experts monitoring the stock, nine currently advocate buying, with none issuing sell recommendations. The consensus 12-month price target stands at €67.42, with a high-end forecast reaching €77.

Leonardo's share price has demonstrated strong momentum, more than doubling since its April 2025 low. Year-to-date, the equity is up approximately 21%, trading just below its March all-time peak of €64.44.

Upcoming Catalysts: Earnings and Shareholder Agenda

The company is scheduled to release its next quarterly report on May 5, 2026, followed closely by its ordinary general meeting on May 7. The shareholder agenda includes approval of the 2025 financial statements, the renewal of the board of directors, and a proposed dividend of €0.63 per share. The ex-dividend date is set for June 22, 2026.

Additionally, shareholders will be asked to authorize a buyback program of up to two million treasury shares, representing about 0.345% of the share capital. The stated purpose is to fund long-term incentive plans and employee share ownership schemes.

Morningstar analyst Loredana Muharremi characterizes Leonardo as being at an "inflection point" in its multi-year strategy, citing an improved portfolio mix, more favorable contract terms, and greater capital discipline. A key area of focus remains the planned joint venture in the Aerostructures segment, a division that has historically been unprofitable. The quarterly report in early May may provide crucial clarity on whether this initiative is beginning to yield the expected benefits.