Key Highlights
- Morgan Stanley executed a dramatic double upgrade on Saab, shifting from “underweight” to “overweight” and boosting the price target to SEK 700 from SEK 540
- With Saab trading at SEK 587.70 as of July 6, the new target suggests approximately 19% upside potential
- The bank’s 2030 earnings per share projection for Saab exceeds Bloomberg consensus estimates by roughly 30%
- Conversely, Kongsberg received a downgrade to “underweight” from “equal-weight,” with its price target adjusted to NOK 330 from NOK 310
- NATO’s selection of Saab’s GlobalEye surveillance platform to succeed its fleet of 14 Boeing E-3A aircraft adds significant contract potential
Morgan Stanley delivered a striking shift in European defense coverage Tuesday, completely reversing its stance on Saab while simultaneously downgrading Kongsberg in a single research note.
The investment bank elevated Saab (SAABb) two notches to “overweight” from “underweight,” simultaneously boosting its valuation target to SEK 700 per share from the previous SEK 540. Based on Saab’s closing price of SEK 587.70 on July 6, this implies potential upside of approximately 19% if the target materializes. Shares climbed roughly 4.9% during Tuesday’s morning session.
Meanwhile, Morgan Stanley took the opposite stance on Norway’s Kongsberg (KOG), dropping it to “underweight” from “equal-weight” and adjusting its price objective to NOK 330 from NOK 310. The revised target for Kongsberg implies minimal upside potential at present trading levels.
The foundation of Morgan Stanley’s bullish thesis on Saab centers on accelerating order activity. The firm believes Saab is positioned for earnings revisions higher that market participants have yet to fully incorporate into valuations.
Morgan Stanley’s earnings per share estimate for Saab in 2030 now stands approximately 30% higher than Bloomberg’s consensus forecast. The bank credits this substantial differential to three specific factors it believes Wall Street analysts haven’t adequately modeled.
These factors include: a restatement affecting the naval division, a SEK 47 billion contract for Polish submarines secured June 29, and a SEK 25 billion order from Ukraine for Gripen aircraft.
Recent contract wins have driven Morgan Stanley’s projected backlog for Saab above SEK 300 billion by the second quarter of 2026. Approximately SEK 130 billion of this total stems from confirmed orders recently secured across multiple platforms including Gripen fighters, GlobalEye surveillance systems, A26 submarines, ground-based air defense/counter-UAS systems, Giraffe radars, and NLAW anti-tank weapons.
Future Opportunities Extend Far Beyond Current Orders
Looking past already-secured contracts, Morgan Stanley identified an additional pipeline valued at approximately SEK 200 billion in Gripen and GlobalEye prospects alone. The bank noted that even this substantial figure “still understates Saab’s medium-term demand opportunity.”
This represents notably bullish language from an analyst team that maintained an underweight recommendation just one day earlier.
The NATO dimension introduces additional upside potential. The military alliance has committed to acquiring Saab’s GlobalEye surveillance aircraft as a replacement for its aging fleet of 14 Boeing E-3A platforms. Morgan Stanley indicated this contract hasn’t been fully incorporated into consensus forecasts yet.
The Case Against Kongsberg
The Kongsberg downgrade primarily reflects valuation concerns. Morgan Stanley isn’t questioning the company’s operational fundamentals, but views the stock as relatively expensive compared to Saab’s opportunity profile at current price levels.
The revised NOK 330 target for Kongsberg offers virtually no appreciation from current trading levels, making the risk-reward equation unappealing in Morgan Stanley’s assessment when contrasted with Saab’s implied 19% upside.
Kongsberg shares declined 0.4% Tuesday as investor focus shifted toward Saab’s rally.
Morgan Stanley characterized Saab as presenting “clearer upgrade risk from strong order momentum not yet reflected in consensus, alongside a year-to-date derating” — highlighting an entry opportunity that has become more compelling following Saab’s relative underperformance during the early months of this year.
The SEK 47 billion Polish submarine deal and the Ukrainian Gripen contract stood out as the most recent positive developments highlighted in the research note, with both awards received within the past two weeks.
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