Leonardo DRS (DRS) drew investor attention after presenting at Eurosatory 2026 in Paris, where it highlighted rising demand for its counter-UAS radar systems, AI-enabled platforms and global production expansion.

Leonardo DRS shares have eased back in the last week, with a 7 day share price return of 5.05% and a 1 day decline of 1.07%. However, the year to date share price return of 32.49% and a 3 year total shareholder return of about 2x suggest momentum over the longer term remains positive.

If Leonardo DRS’s focus on AI driven defense systems has caught your eye, it could be a good moment to widen your watchlist and look at 49 AI infrastructure stocks

With Leonardo DRS trading at $46.08 against an analyst price target of $52.90 and an intrinsic value estimate that sits well above the current level, the key question is whether the stock is still undervalued or if the market is already pricing in future growth.

Most Popular Narrative: 12.9% Undervalued

Leonardo DRS’s most followed narrative anchors fair value at $52.90 versus the last close at $46.08, putting the current price at a clear discount to that view.

The company's strategic alignment with national priorities, including investments in naval modernization, next-generation air and missile defense, and counter-UAS capabilities, sets the stage for premium contract awards and program expansions, benefiting both revenue and net margins over the next several years. Global increases in digitization and modernization of military forces are benefiting DRS's proprietary solutions in network computing, electronic warfare, and electric propulsion, supporting higher average selling prices and expanded platform content, which is expected to enhance net margins and drive operational leverage.

Curious what earnings path, revenue build and margin profile are baked into that $52.90 figure? The narrative leans on ambitious growth, richer profitability and a punchy future earnings multiple, all tied to one detailed financial roadmap.

Result: Fair Value of $52.90 (UNDERVALUED)

However, investors still need to weigh risks around germanium supply and raw material costs, along with heavier R&D spending that could pressure Leonardo DRS’s margins.

Another View: Leonardo DRS Looks Expensive On Earnings

Set against that 12.9% discount to the $52.90 fair value narrative, Leonardo DRS looks far less relaxed when you shift the lens to earnings. The stock trades on a P/E of 42.4x, versus 38.2x for the US Aerospace & Defense industry and 33.9x for peers, while the fair ratio sits at 28.8x.

In plain terms, the market is already paying a clear premium to both sector and fair ratio, which raises the risk that any stumble in execution or sentiment could squeeze the multiple rather than extend it. The real question is whether you think that premium is headroom or a tightrope.

Next Steps

With sentiment on Leonardo DRS split between upside potential and valuation risk, it makes sense to review the numbers yourself and decide where you stand. If you want a concise snapshot of what the market is currently optimistic about, start with the 2 key rewards

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.