Elbit: the order book has outgrown its historical anchor

Backlog from the new customer set passed the traditional one for the first time. That diversifies the political and cyclical risk the multiple has always carried.

Raphael Moreau@raphael_moreau

The mechanism is backlog composition. Two order books of the same size behave differently if one is annually appropriated and the other is contractually committed, because only the second survives a budget cycle. The backlog disclosure now splits by customer type, and the newer category passed the traditional one this year for the first time. The position: long on Elbit, entry locked at publication and the exit dated rather than open-ended. The target is stated in the call block above and the horizon with it. Sized to the catalyst rather than to conviction, with the invalidation written into the kill-switch card instead of left implicit. A macro shock would compress the cyclical earnings faster than the aftermarket can offset, and that is not hedged here.

Discussion · 4

Marco BianchiAUG 14

Finally someone put numbers on this. Second source in a constrained market is genuinely underrated. What is the base rate on this kind of setup working?

Dana KatzAUG 13

Agree with the direction, less with the magnitude. The comp table did more work for me than the narrative did. Any view on how the read-across affects the rest of the group?

Dana KatzAUG 13

Not convinced, but well argued. The utilisation assumption is where I disagree. Would you underwrite this without the catalyst date?

Omri ShakedAUG 12

I have been waiting for someone to make this argument. The cohort split is the detail that everyone leaves out. Curious whether you would still size it the same at a higher entry.

ESLT.TALong

Hit

Entry$119,684.51

Target$139,901.84

Resolved$211,190.00

14d horizon+76.5%

vs S&P -83.0%+159.5% alpha

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This is research, not financial advice. Calls lock at publish and are graded by the market; they can be and often are wrong. Do your own research and consider your own circumstances before acting.