Thales Shares Drop 2.2% at Midday Despite Rafale Contract in India
Defense and aerospace equipment manufacturer Thales saw a 2.2% drop to €226.20 at midday this Tuesday, December 16, despite announcing a major industrial contract with SFO Technologies for Rafale radars destined for India the previous day. This correction is part of a broader downturn in the European defense sector, while the stock maintains an impressive annual performance, up over 63%.
Midday Market Movement
Thales shares fell by €5.10 to €226.20 at mid-session on December 16, after closing at €231.30 the previous day. The traded capital share remains modest at 0.03%, indicating low activity on the stock in a sluggish market context. Over the past week, the decline was limited to 0.35%, but the stock has faced greater pressure over three months with a correction of 13.73%, after reaching historically high levels at the end of summer. Despite this, the annual performance remains exceptional at 63.91%, placing Thales among the top performers in the CAC 40. This downward movement is part of an unfavorable sectoral context this Tuesday, with European defense stocks being penalized by prospects of peace negotiations in Ukraine. The announcement on December 15 of a major first industrial order awarded to SFO Technologies for the production of wired structures of the RBE2 AESA radar for Indian Rafales did not suffice to support the stock price. This contract, part of the group's Make in India strategy, nevertheless illustrates Thales' progress in the Asian market and the strengthening of its local industrial partnership.
Technical Analysis
Technically, the stock is now trading below its main moving averages, indicating a consolidation phase after substantial gains accumulated since the start of the year. The 50-day moving average stands at €241.06, over 6% above the current price, while the 200-day moving average is at €244.72. This setup illustrates the loss of bullish momentum observed since the fall, with the stock gradually losing ground since reaching its annual highs. The Relative Strength Index is at 58, a median level suggesting no marked overbought or oversold conditions, with the stock in a neutral zone after several weeks of correction. The MACD presents a positive histogram at 1.49, signaling a possible beginning of stabilization, although the MACD line remains negative at minus 2.87. This mixed technical signal reflects hesitation among market participants in a context where the major support at €219.50 remains nearly 3% away, providing a safety margin, while the resistance at €247 poses a challenge to confirm a structural bullish recovery.
Financial Outlook and Risks
The group confirmed its annual targets during the publication of its third-quarter 2025 results on October 23, aiming for a revenue between €21.8 and €22 billion, representing an organic growth of 6 to 7%, and an expected adjusted EBIT margin between 12.2% and 12.4%. In the first nine months of the year, revenue reached €15.256 billion, up 8.4% in reported data, driven by strong commercial dynamics in defense and aerospace. The order book remains at a record level with a book-to-bill ratio above 1, ensuring good visibility on future activity. Morgan Stanley's recommendation on November 12 set a target price at €260 with a neutral weighting opinion, representing a potential revaluation of about 15% from the current level. Growth opportunities are supported by European demand for defense equipment, the expansion of digital activities, and the ramp-up of contracts in Asia. However, the group's guidance assumptions incorporate macroeconomic and geopolitical stability, as well as controlled tariff levels, two variables that constitute risk factors to monitor in the coming quarters.
