JPMorgan downgraded Thales stock to Neutral from Overweight, citing persistent weakness in the company's Cyber & Digital division that has offset strong defense sector performance. The firm maintained its December 2027 price target of €275 despite lowering earnings estimates.

The downgrade follows Thales' fiscal 2025 results showing the defense division delivered EBITA 14% above consensus estimates. However, the Cyber & Digital division's performance deteriorated sharply, with sales falling 7% in 2025 compared to the company's previous 10% annual growth expectations.

Thales attributed the weak performance to integration challenges following its $3.6 billion acquisition of Imperva in late 2023. JPMorgan expressed concern that the Digital EBITA decline from €380 million in 2023 to an estimated €275 million in 2026 may be structural rather than cyclical, particularly as the defense division now represents 55% of group sales.