UBS Sets High Price Target for Next Vision, Valuing It at One-Third of Elbit Systems

Swiss bank UBS has issued a price target of NIS 434 for defense tech firm Next Vision, implying a market valuation of approximately NIS 40 billion. This valuation is about one-third of that of Elbit Systems, despite Next Vision's projected 2026 revenues of $355 million being less than 5% of Elbit's annual revenue.

UBS's base case target is NIS 434, with an optimistic scenario of NIS 682. This follows a recent report from US firm Needham, which set a target of NIS 275 with a buy recommendation, a premium of about 23% over the market price at the time. Next Vision currently trades around NIS 226, valuing the company at approximately NIS 21 billion ($7 billion), roughly 20 times its projected sales for the current year.

UBS's higher revenue forecast of $407 million for 2026, exceeding the company's official target, contributes to a seemingly lower price-to-sales multiple in their model, even at a higher price target. The NIS 434 target hinges on three simultaneous assumptions: production scaling from 1,500 units monthly in early 2026 to over 100,000 annually by 2030; an average selling price increase from $12,200 to $14,200; and adjusted EBITDA margins exceeding 60%, which is considered exceptionally high for the defense sector.

Next Vision's recent performance includes a 138% revenue increase to $88.2 million in the latest quarter, driven by a large order from a new customer and preparations for production expansion. The company secured a $9.6 million order from an existing client, and its backlog stood at approximately $265 million at the end of the second quarter, with orders for early 2026 exceeding $205 million. The company has over 300 customers, mitigating dependency on any single drone manufacturer.

Analysts note that Next Vision's product, a stabilized camera for attack vehicles, is a consumable component, ensuring recurring demand as long as such vehicles are in use. The market for such systems is projected to grow significantly. However, the valuation relies heavily on maintaining high margins, as production expansion can pressure profitability. The current market price suggests a P/E ratio of around 70 for 2025, while the UBS target implies a P/E of about 130, both assuming profit growth aligns with revenue growth and high margins are sustained.