The stock of this global manufacturer of high-tech electronic equipment for the mobility and defense sectors continues to underperform the CAC 40 index despite a solid order book and discounted valuation ratios. The stock could take its revenge in 2021 and the move will be played with leverage through a turbo call.
Reinforced under our “French equities” section at a price of 70 euros, the Thales share should end the year, barring any surprises, on a disappointing note and significantly lower than the performance of the CAC 40 index of which it is part. . The cause is exposure to the civil aeronautics sector, now devastated by the crisis, which remains limited to around 12% of the group’s turnover, but which the market is overstating in our opinion. However, the health crisis did not lead to the cancellation of orders and at the end of June the group had a project book of 31.7 billion euros corresponding to almost two years of turnover. Commercial momentum was also very strong at the end of the year with the winning of a mega contract with the German navy for an amount of 1.5 billion for the equipment of MKS180 frigates. Enough to allow Thales to approach 2021 with serenity. In the meantime, the targets for the current year have been confirmed following higher than expected sales in the third quarter. The ambition is to deliver a billing volume of around 16.5 to 17.2 billion with current operating income of 1.3 to 1.4 billion, equivalent to a margin of 8%. At a time when some experts are worried about valuation levels considered high on the equity markets, Thales shares are not expensive with multiples of 18.1 and 13.3 times the estimated profits for this year and 2021 (against an average of 15.6 times).
Thales shares must not fall below 60 euros
This will encourage a catching-up in value in 2021. The movement can be anticipated with leverage by means of a turbo call issued by BNP-Paribas without maturity and with a safety threshold of 60.16 euros under which the Thales share must not fall back. Otherwise, the call will instantly lose almost all of its value. However, the large gap between this safety threshold and the current price of the security limits the risk and provides the time necessary to unwind the position in the event of an unfavorable movement of the security. Meanwhile, the turbo has an attractive leverage of 4 times. So in the hypothesis of an increase in the share to 84 euros for example, the call will appreciate by 35.7%. But be careful because, conversely, it will lose 36.8% of its value if the Thales share falls to 70 euros.
Our advice: buy a Thales turbo call issued by BNP-Paribas (code: FRBNPP021FG4); term: unlimited; level of funding: 57.8409 euros; security threshold: 60.16 euros; parity: 10 turbos for 1 share; price: 1.93 euro; portion: 1.