Bank of America has issued a bullish preview for Italy's defense and aerospace giant Leonardo, projecting second-quarter results that could top market expectations. In a research note, BofA Global Research forecast Q2 revenue of €5.4 billion and orders of €5.5 billion—roughly 2% above consensus—while adjusted operating profit (EBITA) is seen at €516 million, about 10% higher than analysts had modeled.
The report carries extra weight because it comes just ahead of new CEO Lorenzo Mariani's first earnings presentation. Mariani took the helm in April after a leadership shake-up, and investors will be listening closely for how firmly he backs the company's existing strategy and what changes he might signal.
What Leonardo Does and Why It Matters
Leonardo is one of Europe's largest defense contractors, with a broad portfolio spanning military aircraft (including the Eurofighter Typhoon), helicopters, electronics, and cybersecurity. The company also has a growing space division. Its performance is closely tied to European defense spending, which has risen sharply since Russia's invasion of Ukraine, as governments boost budgets for new equipment and modernization.
The company's order book has been swelling in recent years, and BofA's forecast of €5.5 billion in new orders for Q2 suggests that momentum continues. For context, Leonardo's order backlog stood at over €40 billion at the end of 2024, providing multi-year revenue visibility.
The Mariani Factor: A New Era
Lorenzo Mariani, previously co-general manager, stepped into the CEO role after former chief Roberto Cingolani departed amid boardroom tensions. Mariani is seen as a steady hand with deep operational experience, having led Leonardo's electronics and cybersecurity divisions. His first half-year results presentation will be a key moment for investors to gauge his priorities—whether he will maintain the company's focus on organic growth, pursue acquisitions, or adjust the portfolio.
BofA's note treats the update as a “message” moment, meaning Mariani's tone and emphasis could move the stock more than the numbers themselves. Investors will watch for any changes to financial targets, commentary on supply chain issues, or hints about capital allocation, including dividends and share buybacks.
What It Means for Investors
For everyday investors, the BofA preview is a reminder that defense stocks can offer both growth and income, but they come with geopolitical and execution risks. Leonardo shares have rallied over the past year, partly on the back of higher defense budgets across Europe. A Q2 beat could provide a short-term boost, but the real focus should be on Mariani's strategic vision and whether the company can sustain its order momentum.
Investors should also consider the broader backdrop: European defense spending is expected to keep rising, but competition is intense, and margins can be squeezed by inflation and supply chain bottlenecks. Leonardo's adjusted EBITA margin, which BofA sees at around 9.6% for Q2, is a key metric to watch.
For those holding Leonardo shares or considering an entry point, the earnings call will be the main event. Listen for updates on the Eurofighter program, helicopter deliveries, and any news on the company's space joint ventures. Also watch for commentary on the U.S. market, where Leonardo has been expanding its presence.
In other defense and industrial news, Deutz is targeting €1 billion in energy revenue as AI data centers drive demand for backup power, highlighting how different sectors are benefiting from the tech boom. Meanwhile, Vault Minerals reported a strong June quarter with free cash flow beating forecasts, showing that mining companies are also capitalizing on favorable conditions.
Bottom Line
Bank of America's optimistic call on Leonardo sets a positive tone ahead of the company's first-half results. The combination of a likely earnings beat and a new CEO's debut makes this a pivotal moment for the stock. Investors should tune into the presentation for clues on strategy, but the underlying fundamentals—strong orders, rising defense budgets, and a solid backlog—remain supportive.
As always, no single analyst forecast guarantees future performance. But for those following European defense, Leonardo is a name to watch closely in the coming weeks.
