Key Takeaways:
- Thales S.A (HO) operates across defense, aerospace, space, and digital identity and security, so it benefits from rising demand for mission‑critical systems worldwide.
- HO stock could reasonably reach €319 per share by December 2029, based on our valuation assumptions.
- This implies a total return of 20.1% from today’s price of €266, with an annualized return of 4.7% not including dividends over the next 4.0 years.
Thales S.A. (HO) is a global leader in defense electronics, avionics, and digital security, and it serves governments and enterprises that rely on secure and resilient systems.
The company sells air defense systems, avionics suites, naval warfare solutions, secure communications, cyber defense tools, and digital identity products, so it is deeply embedded in long‑term defense and infrastructure programs.
Thales’ broad portfolio and long customer relationships can support resilient cash flows, but the stock’s strong past performance means valuation now matters more for new investors.
Here’s why Thales stock could still provide solid returns through 2029 as it leverages defense demand and digital security tailwinds.
What the Model Says for Thales Stock
We analyzed the upside potential for Thales stock using valuation assumptions based on its diversified defense and security portfolio, growing exposure to cyber and digital identity, and resilient long‑term contracts with governments and enterprises.
Based on estimates of 7.5% annual revenue growth, 12.7% net income margins, and a normalized exit P/E multiple of 21.5x, the model projects Thales S.A. stock could rise from €266 to €286 per share.
That would be a 7.5% total return, or a 3.7% annualized return over the next 2.0 years.
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for Thales S.A. stock:
1. Revenue Growth: 7.5%
In the guided model, Thales’ revenue growth (CAGR) is set at 7.5% through 2027, which reflects healthy but moderating growth after a very strong recent year.
Historically, revenue grew 11.7% over the last year, compared with 2.3% over five years and 4.7% over ten years, so the forecast assumes recent acceleration cools slightly but remains above longer‑term trends. This is supported by continued investment in defense, air traffic management, and secure digital identity solutions, but it does not rely on unusually aggressive expansion.
In the custom valuation for 2024–2030E, the Low, Mid, and High cases assume 7.1%, 7.9%, and 8.6% revenue growth (CAGR), respectively.
These scenarios cluster around high single‑digit growth, so they imply that Thales can continue compounding steadily as defense and security needs expand.
2. Operating Margins: 12.7%
Thales delivered 11.6% operating margins over the last year and 10.9% over five years, which reflects improved profitability compared with the past decade.
Based on analysts’ consensus estimates, we assume a 12.7% operating margin, so it is expected to experience modest margin expansion as Thales scales complex systems and increases software and services content.
This seems consistent with the company’s move toward higher‑value defense electronics and digital security, but it still leaves room for contract mix and cost swings.
In the 2024–2030E scenarios, net income margin is 9.4% in the Low case, 9.9% in the Mid case, and 10.4% in the High case, compared with 9.6% over the last year.
Margins have risen from 7.6% over five years and 4.4% over ten years, so the model assumes Thales can sustain these gains rather than revert to older levels.
3. Exit P/E Multiple: 21.5x
Thales stock currently trades near a 23.5x P/E multiple, above the 17.2x five‑year and 17.0x ten‑year averages, showing that investors already assign a premium for its defense and security positioning.
Based on analysts’ consensus estimates, we use a 21.5x exit multiple, which is slightly below the latest level but still above long‑term averages, so it assumes the market continues to value Thales as a high‑quality industrial and defense name.
This reflects expectations for steady growth, solid cash generation, and continued strategic importance in defense and digital identity markets.
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What Happens If Things Go Better or Worse?
Different scenarios for HO stock through 2030 show varied outcomes based on growth, margins, and valuation behavior (these are estimates, not guaranteed returns):
- Low Case: Revenue and margins track the lower end of expectations, and multiple expansion is modest → -0.7% annual returns
- Mid Case: Revenue grows around 7.9%, margins hold near 10%, and the multiple expands moderately → 4.7% annual returns
- High Case: Growth and margins surprise on the upside and the P/E continues to expand → 9.6% annual returns
Even in the conservative Low Case, Thales’ defense and security focus helps support demand, but the modeled negative return shows that slower growth or multiple compression could still hurt shareholders.
See what analysts think about HO stock right now (Free with TIKR) >>>
How Much Upside Does Thales S.A. Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
See a stock’s true value in under 60 seconds (Free with TIKR) >>>
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
