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Investing.com -- Shares in Kongsberg Gruppen ASA fell 6% after the defense group’s second-quarter core profit missed analyst expectations on weaker margins and a slowdown in order momentum.
Kongsberg reported second-quarter EBIT of NOK 1.67 billion, corresponding to a 16.1% margin, which came in 5% below the consensus estimate of approximately 17%. Revenue rose to NOK 10.39 billion, in line with analysts’ forecasts.
"We see this set of results as disappointing, with few positive surprises," Morgan Stanley analysts said, adding that the quarter was "soft” due to a slowdown in the book-to-bill ratio, in-line sales growth and "weak EBIT" versus company consensus.
Order intake was NOK 17.1 billion, up "~50% yoy," Morgan Stanley said, but the resulting book-to-bill ratio of 1.6 times marked a slowdown from 2.9 times in the first quarter and 2.6 times in the fourth quarter of 2025.
The broker called this "a slight book-to-bill slowdown QoQ," while noting "continued order momentum with a strong acceleration in Missiles activities."
The margin miss was concentrated in Defence Systems, where EBIT margin contracted 185 basis points year-on-year to 17.7%, 2% below consensus.
Discovery’s margin also missed, down 230 basis points, while Missiles & Aerostructures came in slightly ahead of consensus. Morgan Stanley attributed the contraction to "geography and customer mix or current ramp-up costs."
Kongsberg confirmed its full-year 2026 guidance of revenue growth above 2025 levels, implying more than 30% growth, versus company consensus of 34%.
The broker noted the company has "NOK 21bn of backlog coverage for H2," representing 86% of its full-year sales estimate.
Morgan Stanley rates the stock "underweight" with a price target of NOK 330, and said the results will "continue to challenge the current 40% valuation premium" the shares carry versus peers.
The broker flagged margin progression as "one of the main debates" since Kongsberg’s Capital Markets Day, where the company set a long-term margin target of above 16%.
Group order backlog stood at NOK 158 billion, up 4% from the prior quarter, Morgan Stanley said.
