Saab Stock Jumps After Morgan Stanley Double-Upgrade

TLDR

• Morgan Stanley double-upgraded Saab from “underweight” to “overweight,” raising its price target to SEK 700 from SEK 540
• Saab closed at SEK 587.70 on July 6, implying roughly 19% upside to the new target
• Morgan Stanley’s 2030 EPS forecast for Saab sits ~30% above Bloomberg consensus
• Kongsberg was downgraded to “underweight” from “equal-weight,” with a target trimmed to NOK 330 from NOK 310
• NATO has decided to buy Saab’s GlobalEye surveillance aircraft to replace its 14 Boeing E-3A planes

Morgan Stanley made a bold call on European defense Tuesday, executing a full reversal on Saab while pulling the plug on Kongsberg in the same note.

Saab AB, SAABF

The bank double-upgraded Saab (SAABb) to “overweight” from “underweight,” lifting its price target to SEK 700 per share from SEK 540. Saab closed at SEK 587.70 on July 6, putting roughly 19% upside on the table if Morgan Stanley’s target is met. The stock was up around 4.9% on Tuesday morning.

At the same time, Morgan Stanley downgraded Norwegian rival Kongsberg (KOG) to “underweight” from “equal-weight,” trimming its target to NOK 330 from NOK 310. Kongsberg’s new target offers near-flat upside at current levels.

The core of Morgan Stanley’s argument on Saab is order momentum. The bank says Saab has a clearer path to earnings upgrades that the market hasn’t fully priced in yet.

Morgan Stanley’s 2030 EPS forecast for Saab now sits roughly 30% above Bloomberg consensus. The bank attributes that gap to three items it says the Street has not yet absorbed.

Those three items are: a naval divisional restatement, a SEK 47 billion Polish submarine contract received on June 29, and a SEK 25 billion Ukrainian Gripen award.

Recent order conversions pushed Morgan Stanley’s estimated Saab backlog to more than SEK 300 billion by Q2 2026. Around SEK 130 billion of that comes from visible contracts recently received across Gripen, GlobalEye, A26 submarines, GBAD/C-UAS, Giraffe, and NLAW.

A Pipeline That Goes Well Beyond the Backlog

Beyond what’s already booked, Morgan Stanley flagged a further pipeline of approximately SEK 200 billion in Gripen and GlobalEye opportunities alone. The bank said even that figure “still understates Saab’s medium-term demand opportunity.”

That’s a pretty striking statement from an analyst desk that was sitting at underweight just a day ago.

The NATO angle adds another layer. The alliance has decided to buy Saab’s GlobalEye surveillance aircraft to replace its 14 aging Boeing E-3A planes. That contract has not yet been fully reflected in consensus estimates, according to Morgan Stanley.

Why Kongsberg Gets Cut

The downgrade of Kongsberg comes down to valuation. Morgan Stanley isn’t bearish on the company’s fundamentals, but sees the stock as stretched relative to Saab’s opportunity set at current prices.

The new NOK 330 target for Kongsberg represents essentially no upside from where the stock was trading, making the risk/reward unattractive in Morgan Stanley’s view compared to Saab’s 19% implied move.

Kongsberg fell 0.4% on Tuesday as Saab’s gains drew investor attention.

Morgan Stanley described Saab as offering “clearer upgrade risk from strong order momentum not yet reflected in consensus, alongside a year-to-date derating” — pointing to an entry point that has become more attractive after Saab’s relative underperformance earlier this year.

The SEK 47 billion Polish submarine contract and the Ukrainian Gripen award were the most recent catalysts cited in the note, both received within the last two weeks.

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