Fincantieri Stock Jumps as BofA Initiates 'Buy' Rating on Underwater, Naval Growth

Shares in Italian shipbuilder Fincantieri rose sharply after BofA Securities initiated coverage with a "Buy" rating and a €17 price target. The bank's analysts argue that the market has not fully appreciated the growth prospects of the company's naval and burgeoning underwater business segments.

Following the announcement, Fincantieri's stock was trading up 3.2% at €12.04, according to the source. The positive analyst note provides a boost to the shares, which have fallen approximately 36% year-to-date, weighed down by a February share sale and concerns over defense spending.

BofA's Bullish Outlook

BofA's positive thesis rests on the belief that investor focus will shift from recent headwinds to the company's strong earnings potential. The bank forecasts Fincantieri's earnings per share will grow at a compound annual rate of 34% between 2026 and 2030, significantly outpacing the 23% average for its defense sector coverage.

The analysts highlighted several key growth drivers:

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• Underwater Business: Expected to generate €1.8 billion in revenue and €415 million in EBITDA by 2030, figures that are 6% and 8% above consensus, respectively. This division could account for about 30% of group EBITDA by 2030.
• Naval Shipbuilding: Revenue is projected to grow by over 18% annually from 2026 to 2030, as a pipeline of nearly €5 billion in signed contracts converts into the reported backlog.
• Cruise Ships: EBITDA margins in its cruise ship segment are expected to widen by 200 basis points to 8.3% by 2030, supported by a record order book.

Valuation and Context

BofA noted that Fincantieri currently trades at a discount to its peers. The company's valuation is 5.4 times its expected 2030 enterprise value to EBIT (EV/EBIT), well below the 7.7 times average for other defense stocks covered by the bank.

The bank's €17 price target is derived from a 9.5 times 2029 EV/EBIT multiple, discounted back to 2027. Potential risks to this outlook, as cited by BofA, include weaker cruise margins from inflation on fixed-price contracts, geopolitical risks affecting naval orders, and execution challenges in the new underwater unit.