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Investing.com - Morgan Stanley initiated coverage on Elbit Systems (NASDAQ:ESLT) with an Equalweight rating and a price target of $531.00 on Thursday. The stock is currently trading at $500.73, about 5.7% below Morgan Stanley’s target and near its 52-week high of $529.99.
The investment firm sees Elbit Systems as offering a compelling value proposition for investors seeking a defense pure-play that is diversified across geographies and capabilities amid rising global defense spending. InvestingPro data shows the company has achieved impressive revenue growth of 18.35% over the last twelve months, with a beta of -0.39, indicating it typically moves in the opposite direction of the broader market.
Morgan Stanley’s adjusted earnings per share estimates for Elbit are largely above consensus expectations, with 2025 adjusted EPS of $12.63 (above consensus of $12.11), 2026 adjusted EPS of $14.05 (above consensus of $13.95), and 2027 adjusted EPS of $15.80 (above consensus of $15.65). The company reported diluted EPS of $9.87 for the last twelve months, suggesting analysts anticipate continued earnings growth.
The firm notes that Elbit currently trades at a significant premium to U.S. Defense Primes, European Defense Primes, and Asian Defense peers, with Elbit’s 2027E P/E currently at approximately 31.0x consensus, compared to approximately 17.8x for U.S. Primes, 21.3x for European Primes, and 22.9x for Asian Primes. This premium valuation is even more pronounced in current terms, with InvestingPro showing a P/E ratio of 51.11 and EV/EBITDA of 29.34, suggesting the stock is currently overvalued compared to its Fair Value.
Morgan Stanley expects Elbit to continue trading at a premium to these cohorts but sees the market largely pricing in Elbit’s potential following an approximately 95% run in the stock year-to-date, resulting in what the firm describes as a balanced risk-reward at current levels with approximately 1.3x Bull/Bear skew. InvestingPro confirms this remarkable performance with a 94.88% YTD return and 100.44% one-year return. Despite the high valuation, the company has maintained dividend payments for 29 consecutive years and operates with a moderate level of debt, according to InvestingPro Tips. For comprehensive analysis of Elbit Systems and 1,400+ other stocks, check out the Pro Research Reports available on InvestingPro.
In other recent news, Elbit Systems reported its third-quarter earnings for 2025, exceeding analysts’ expectations with an earnings per share (EPS) of $2.80, compared to the forecasted $2.48. Despite this positive EPS surprise of 12.9%, the company’s revenue of $1.92 billion did not meet the anticipated $1.99 billion, missing the target by 3.52%. The earnings report highlighted strong EPS performance and strategic advancements in Elbit Systems’ product offerings. Additionally, BofA Securities raised its price target for Elbit Systems to $550 from $540, while maintaining a Buy rating on the stock. This adjustment reflects stronger than expected growth in the quarter and a broader expansion for defense companies, as noted by BofA Securities. These developments indicate a focus on growth and strategic positioning within the defense sector.
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