BofA Securities Adjusts Elbit Systems Ltd. Price Target Upward to $540

BofA Securities Adjusts Elbit Systems Ltd. Price Target Upward to $540

BofA Securities has raised its price target for Elbit Systems Ltd. (ESLT) to $540 from $500, while reiterating a Buy rating on the defense technology company's stock. This adjustment reflects ESLT's sustained strong performance and robust demand across the global defense sector.

The Event in Detail

The updated price target signifies an 8% upside from the previous target set by BofA Securities. Concurrently, the firm revised its 2025 earnings per share (EPS) forecast for Elbit Systems upward to $12.10 from an earlier estimate of $11.35. This positive revision follows Elbit Systems' impressive financial results for the second quarter of 2025. The company reported non-GAAP diluted net earnings per share of $3.23, a 55% increase year-over-year, significantly exceeding analyst expectations of $2.41. Revenues for the quarter reached $1.97 billion, also surpassing the forecasted $1.82 billion. This strong performance builds on a robust first quarter of 2025, where actual revenue of $6.47 billion and EPS of $8.03 both outpaced consensus estimates.

Analysis of Market Reaction

BofA Securities' decision to elevate ESLT's price target is primarily driven by the company's consistent delivery on surging demand within the defense industry. The firm noted "multiple expansion across defense sector names," indicating a broader trend of increased valuation multiples for defense contractors. The new $540 target is based on a 23x EV/EBITDA multiple on 2026 estimates, an increase from the previous 21x multiple. Elbit Systems Ltd.'s stock has demonstrated considerable momentum, achieving a 130% return over the past year and an 89.08% gain year-to-date. This upward trajectory culminated in the stock reaching a new 52-week high of $500.17 during mid-day trading on September 15, 2025, closing at $501.67. The company's valuation premium, when compared to large-cap U.S. defense companies, is considered fair by BofA, aligning with that of small and mid-cap U.S. and European defense counterparts.

Broader Context and Implications

The positive outlook for Elbit Systems is situated within a period of heightened global defense spending, fueled by escalating geopolitical tensions and ongoing conflicts. The global aerospace and defense sector recorded $922 billion in revenue across its top 100 companies in 2024, with overall global defense spending reaching an astounding $2.443 trillion in 2023, marking a 6.8% gain over the prior year. This increased demand is reportedly outpacing the supply and capacity of defense companies.

Elbit Systems has significantly bolstered its order backlog, which stood at $23.8 billion as of June 30, 2025. Approximately 68% of this backlog is attributable to orders from outside Israel, indicating a diversified global presence. Recent notable contracts include a $1.635 billion agreement with an undisclosed European country over five years, a $260 million contract for advanced airborne munitions for the Israel Ministry of Defense, and a $260 million contract with Airbus Defence and Space for J-MUSIC™ Directed Infrared Counter Measures (DIRCM) systems for the German Air Force. The company's cash flow from operating activities for the first six months of 2025 surged to $304.0 million, a significant increase from $26.0 million in the same period of 2024, largely due to strong net income. Furthermore, Elbit Systems has increased its quarterly dividend from $0.60 to $0.75, signaling strong financial health and a commitment to shareholder returns.

Expert Commentary

Elbit Systems' President and CEO, Bezhalel Machlis, commented on the company's performance, stating:

"Our strong results are a testament to the sustained demand for our proven technologies and solutions, leveraging strong domestic and global demand and presence."

He further emphasized that the company's long-term strategy and investments, particularly its robust presence in Europe through subsidiaries and strategic partnerships, have been instrumental in securing major contracts. This sentiment is echoed by analysts, who have collectively raised full-year 2025 EPS estimates for ESLT from $30.50 to $34.83 and revenue estimates from $25.85 billion to $26.42 billion.

Looking Ahead

The outlook for Elbit Systems remains positive, underpinned by a substantial order backlog and a robust global demand for defense technologies. While the broader defense industry faces challenges such as supply chain vulnerabilities, particularly for critical raw materials and semiconductors, Elbit Systems' strategic positioning and consistent operational execution appear to mitigate these risks. Investors will continue to monitor geopolitical developments and further contract announcements, which are expected to sustain the company's growth trajectory. The increased dividend and strong financial metrics reinforce Elbit Systems' attractiveness within the defense sector, positioning it for continued stability and potential capital appreciation.