Goldman Sachs, Morgan Stanley, Credit Suisse, Oddo BHF… analysts and other brokerage firms are getting in tune with Airbus, in turn reviewing their target price on the share of Europe’s industrial flagship.
In the midst of an unprecedented crisis arising from the health crisis, the aviation giant has visibly reassured the markets by lifting the veil a decade ago on the state of its business in the last quarter of the year.
However, 2020 will be remembered as soon as possible for Airbus, co-leader with Boeing in aircraft construction. And for good reason, the fall in air traffic has put a strain on the financial health of the companies, which have put a brake on their spending.
The result for Airbus was a 65% drop in net orders to 268 units, with 115 cancellations. This figure should be tempered by the fact that at the end of December, the order book stood at 7,184 aircraft.
On the other hand, the manufacturer born in 1949 has limited breakage on the delivery front (-34% to 556 units), the vast majority of which concern the A320 single-aisle family. This figure, which is higher than the consensus and management’s expectations, enables Airbus to keep even further ahead of its eternal American competitor, which had delivered only 118 aircraft by the end of November.
It should be remembered that in the aeronautical sector, deliveries are a reliable indicator of profitability, since customers pay the bulk of the bill when they take possession of the aircraft.
According to Airbus, which has reduced its production rates by almost 40% since last spring, air traffic could return to pre-crisis levels within two to four years. It has also warned its subcontractors to prepare for a possible increase in production rates to 47 A320 family aircraft per month, compared to 40 at present, but probably not before the start of the third quarter.
Goldman Sachs dithyrambique
As mentioned in the introduction, the Airbus share (-30% at the end of 2020) is reaping the benefits of analysts. The consensus thus sends the share to a price of 104.86 euros on a 12-month horizon (potential increase of 18% based on the current price of 89 euros), while there are 20 brokers advising to buy Airbus, for only one to sell.
Goldman Sachs, which expects the aircraft manufacturer to have posted a solid performance in the last quarter of last year, is a strong supporter of the stock, which it considers to be one of the most attractive stocks in the sector. A few days ago, the US investment bank reiterated its recommendation to buy, targeting a share price of 137 euros, the highest in the community. The analyst expects 620 deliveries and 3.6 billion euros in operating profit for the current year.
Another US investment bank to follow the dossier is Morgan Stanley, which has just raised its target price to 112 euros from 73 euros, considering that the stock is at a clear discount to other quality industrials. The analysts in charge of the dossier consider the recently announced aircraft production forecasts to be positive. And say they may have underestimated Airbus’ ability to place new aircraft.
Airbus also serves as a favorite stock within the European aerospace and defense sector at Credit Suisse, which has reaffirmed its « outperformance » view with a target price that has been raised from 103 to 105 euros. The broker believes that Airbus offers growth potential in the short term, as the improved prospects for a recovery in traffic may support the consensus expectations for deliveries. In the long term, the A320 franchise is the aircraft program best positioned for recovery, Credit Suisse adds.
The same applies to Oddo (purchase / 114 euros), which believes that the Airbus product range is perfectly positioned to meet airline demand in the phase of traffic recovery. The recommendation reflects a cash generation that should, in his view, come out better than expected.
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