OHB SE (OHBG) Report Interpretation

Overview

Goldman Sachs initiates coverage of OHB SE, a focused European space company, at Neutral. The report identifies substantial structural growth from European civil, defence and sovereign-space investment, but balances this against demanding execution, investment and cash-conversion assumptions already substantially reflected in valuation.

Core views

Goldman Sachs argues that OHB offers scarce listed exposure to a strengthening European space and defence-space spending cycle. It cites €22.3bn of ESA commitments for 2026–28, up 31% from the 2022 Ministerial Council level, Germany’s planned €35bn military-space investment through 2030, and the European Commission’s proposed €131bn defence, security and space envelope for 2028–34. OHB’s capabilities in Earth observation, navigation, secure communications, reconnaissance, space safety, science missions, ground infrastructure and sovereign launch access position it across these funding priorities. The report stresses, however, that programme opportunities are not necessarily secured contracts: ultimate benefit depends on budget allocation, procurement awards and OHB’s execution. The company’s existing order book provides the factual base for the growth case. Backlog rose from €1.7bn at FY2023 to €3.2bn at FY2025 and c.€3.4bn at Q1 2026, while management has identified a c.€20bn active pipeline with estimated win probability of at least 50%. Goldman Sachs expects OHB to convert awarded programmes and part of this pipeline into higher activity, but identifies programme execution, milestone timing, working-capital phasing and capacity build-out as the key constraints. Long-duration programmes including Galileo and the €839mn LISA award give multi-year visibility, but also make earnings and cash flow dependent on delivery quality. The report forecasts group Total Operating Performance to increase from €1.25bn in 2025 to €4.0bn in 2030E, a 26% CAGR. Space Systems remains the largest growth contributor, with TOP forecast to rise from €983mn to €2.73bn, supported by navigation, Earth observation, science, exploration and defence-space programmes. Access to Space is forecast to grow from €163mn to €766mn as Ariane 6 component, tank and structure activity ramps. Digital is projected to expand from €146mn to €561mn through ground systems, satellite operations, antennas, geospatial analytics and data services. The faster growth of the latter two divisions should make the earnings mix more balanced, although Space Systems remains central. Goldman Sachs forecasts adjusted EBITDA rising from €126mn in 2025 to €527mn in 2030E, a 33% CAGR, and group EBITDA margin expanding from 10.1% to 13.1%. The mechanism is higher volume, improved fixed-cost absorption and a greater contribution from Access to Space and Digital. Segment margin forecasts are 12.6% for Space Systems, 14.4% for Access to Space and 14.3% for Digital by 2030E, versus 9.9%, 10.1% and 6.1%, respectively, in 2025. The report notes that this margin case depends on successfully scaling all three segments without programme-cost pressure or disruptions. Cash conversion is a major timing issue rather than a straight-line outcome. Goldman Sachs expects elevated growth capex and working-capital needs to drive company-defined adjusted free cash flow to -€52mn in 2027, before recovery from 2028 as earnings scale and the working-capital drag eases. Capex is forecast to rise from €24mn, or 1.9% of TOP, in 2025 to €69mn, or 3.8% of TOP, in 2027E, then moderate. Trade working capital is forecast to decline from c.23% of TOP in 2025 to c.14% by 2030. The c.€482mn H1 2026 capital increase is expected to move the company from €99mn net debt in 2025 to €380mn net cash in 2026E; net cash is forecast to dip to €301mn in 2027 before reaching €550mn in 2030E. Rocket Factory Augsburg provides separate optionality rather than consolidated earnings support. OHB holds c.65% of RFA, but it is equity-accounted and excluded from consolidated TOP and EBITDA guidance. Successful RFA ONE development, launch and commercialization could add value, but Goldman Sachs highlights development, funding, reliability, customer-conversion and scale-up risk. The €250 12-month target price is derived entirely from a DCF. The valuation uses sustainable free cash flow from adjusted EBIT, a 9.0% WACC and a 3% terminal growth rate; it assumes EBIT growth moderates to c.6% CAGR in 2032–36E after c.35% in the 2026–31 explicit forecast period, with long-term cash conversion normalizing to 80% of NOPAT. The report also uses forward EV/EBIT as a secondary cross-check and finds OHB’s forecast growth is accompanied by a premium multiple versus relevant European aerospace and defence peers. Goldman Sachs therefore concludes that the shares already reflect a meaningful portion of the medium-term opportunity, supporting a Neutral initiation.

Analysis framework

The report first assesses European institutional and defence-space demand and OHB’s capability fit, then evaluates backlog, pipeline and each operating segment. It builds forecasts for revenue-like TOP, margins, capex, working capital, cash flow and net cash through 2030 before valuing sustainable through-cycle free cash flow using a DCF and checking the result against forward EV/EBIT peer multiples.

Methodology notes

• Valuation methodsDCF (Discounted Cash Flow)

  Discounted cash flow valuation based on sustainable free cash flow derived from adjusted EBIT.

  Goldman Sachs uses forecast operating profit, taxes, working capital, capex and long-term cash conversion to estimate cash flows, discounts them at a 9.0% WACC and applies a 3% terminal growth rate to derive the €250 target price.

• Valuation methodsEV/EBITDA valuation

  Forward enterprise-value-to-EBIT comparison used as a relative valuation cross-check.

  The report compares OHB’s forward EV/EBIT valuation with European aerospace and defence peers to assess whether its higher forecast growth is already reflected in its market valuation.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Analysis of OHB across satellite systems, launch infrastructure and ground/data services.

  The report links public space and defence budgets to programme awards, backlog, production capacity and the three operating segments to explain the expected earnings progression.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• OHB SE (OHBG.DE)

  Primary covered company and prospective beneficiary of European institutional and defence-space funding.

  Strengths

  Focused European space platform with c.€3.4bn backlog, broad capability coverage and exposure to Space Systems, launch infrastructure and Digital services.

  Weaknesses

  Long-cycle, project-driven operations make earnings and cash generation sensitive to execution and milestone timing.

  Comparison

  The report views OHB as trading at a premium to relevant European aerospace and defence peers on forward EV/EBIT, despite imperfect comparability.

  Risks

  Programme execution, funding/procurement timing, competition, working-capital volatility and RFA development risk.

• Rocket Factory Augsburg

  Equity-accounted OHB investment providing optionality in small-launch and responsive-launch markets.

  Strengths

  Potential value creation from RFA ONE launch and commercialization; OHB holds c.65%.

  Weaknesses

  Excluded from OHB consolidated TOP and EBITDA guidance.

  Risks

  Technical development, funding, launch reliability, customer conversion and scale-up risk.

Key data

• 12-month price target€250Derived 100% from DCF; c.7% upside versus the August 3, 2026 close of €233.5.
• Group TOP forecast€1.25bn in 2025 to €4.0bn in 2030EEquivalent to a 26% CAGR.
• Adjusted EBITDA forecast€126mn in 2025 to €527mn in 2030EEquivalent to a 33% CAGR.
• Adjusted EBITDA margin10.1% in 2025 to 13.1% in 2030Ec.300bp expansion driven by scale, operating leverage and mix.
• Order backlogc.€3.4bn at Q1 2026Up from €3.2bn at FY2025 and €1.7bn at FY2023.
• Identified pipelinec.€20bnActive opportunities with estimated win probability of at least 50%; not secured orders.
• Adjusted free cash flow-€52mn in 2027EExpected trough during the capacity-investment and working-capital build phase.
• DCF assumptions9.0% WACC; 3% terminal growth; 80% long-term cash conversionKey valuation inputs for the €250 target.

Impact & implications

The report sees OHB as a beneficiary of European space and defence investment, with backlog and pipeline supporting a large 2025–30 growth opportunity. Its Neutral view reflects the need for sustained programme delivery, capacity expansion and improving cash conversion before the forecast benefits are fully realized, alongside a valuation that already captures much of that opportunity.

Risks

• Complex long-duration programmes could face development delays, supplier issues, missed milestones or cost overruns, reducing margins and increasing cash-flow volatility.
• A larger competitor created through the proposed combination of Airbus, Leonardo and Thales space activities could pressure OHB’s market share, pricing or programme role.
• Delays or changes in ESA, EU, national-agency or defence funding and procurement could slow order intake, backlog conversion and cash generation.
• Capacity expansion, working-capital growth and unfavorable customer-payment phasing could require more funding and weaken free cash flow.
• RFA faces development, funding, technical, reliability, commercialization and scale-up risks.

What to watch

• Conversion of the c.€20bn pipeline into firm awards and backlog.
• Execution of major programmes, including delivery milestones and cost control.
• Progress in capacity expansion and whether capex moderates after the 2027E peak.
• Working-capital trends and the expected free-cash-flow recovery from 2028.
• Growth and allocation of German, ESA and EU space and defence budgets.
• RFA ONE development, launch and commercialization milestones.