Shares in Saab fell over 2% despite a better-than-expected fourth quarter and an upgraded growth outlook. Investors seem unconvinced that the defense contractor's valuation is justified. Q4 order intake was SEK 100.11 billion, beating estimates, fueled by large orders for Gripen fighters and submarines. The company's full-year order backlog reached SEK 274.53 billion.

Saab's Q4 sales rose 33% to SEK 27.70 billion, exceeding expectations, with adjusted operating profit at SEK 2.93 billion. The company raised its 2023-2027 organic sales growth guidance to roughly 22%, from 18% previously. However, analysts suggest the new guidance offers limited upside to justify the current valuation, which trades at a premium to peers.

Morgan Stanley maintains an “underweight” rating, noting the premium valuation. Kepler Cheuvreux also has a “reduce” rating, citing the high price-to-earnings ratio. Full-year 2025 sales reached SEK 79.15 billion. The defense sector is closely watched for geopolitical tensions and government spending, affecting stock performance.

Going forward, investors will watch how Saab's order book and sales growth translate into profitability. Any shifts in defense spending or geopolitical events could significantly impact the company. The market will be watching the company's next earnings report closely to see if they can justify their premium valuation.