We Increase Leonardo's Fair Value Estimate as We Update Our Near-Term Forecasts

Leonardo has undergone a long and painful transition from a holding company housing strategic political and economic Italian state industrial assets to a more focused aerospace and defense business. The crown jewel in the portfolio is the helicopter business, which houses the well-known AgustaWestland brand with best-in-class profitability. The defense, electronics, and security, or DES, division hosts a diverse set of sensors, solutions, and systems for domestic and export military customers. Ongoing restructuring in the aerostructure business offsets the rosier prospects of the aircraft business in the aeronautics segment. The current portfolio makes strategic sense, and we believe the group is in a fair position to compete in the mature but stable aerospace and defense markets.