Dassault Aviation (AM.PA) is a French aerospace leader with a dual focus on combat aircraft and business jets, but its space activities—including the development of orbital systems and participation in European space programs—make it a fitting addition to the Space Economy Portfolio. The company’s defense segment provides exceptional revenue visibility, with a backlog of over €40 billion, largely driven by Rafale export orders. This backlog supports a multi-year production ramp, which is a clear catalyst for earnings growth.
In the next 12 months, we expect Dassault to benefit from continued Rafale deliveries, potential new export contracts, and the ramp-up of the FCAS (Future Combat Air System) program, which includes space-based components. The company’s strong balance sheet, with net cash position, allows for shareholder returns, including a possible special dividend. While the stock trades at a premium to peers, the quality of earnings and growth prospects justify the valuation.
Key risks include geopolitical tensions affecting export markets, supply chain disruptions, and the cyclicality of the business jet segment. However, the defense backlog mitigates these risks. We believe Dassault Aviation offers a balanced risk-reward profile for investors seeking exposure to space and defense.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always conduct your own research before making investment decisions.