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On Monday, RBC Capital Markets adjusted its outlook on Airbus (AIR:FP) (OTC: EADSY (OTC:EADSY)), increasing the price target to €185 from the previous €160, while keeping the Outperform rating intact. With a current market capitalization of $138.3 billion, Airbus is currently trading slightly above its InvestingPro Fair Value. The revision follows Airbus' robust December deliveries, leading the firm to revise its delivery projections for the year 2025 to approximately 825 aircraft, signaling an estimated 8% growth.
Ken Herbert, the analyst at RBC Capital, highlighted that Airbus' performance exceeded investor expectations, which had originally set 800 deliveries as the benchmark for the company's 2025 guidance. The upward adjustment in the price target to €185 reflects a response to Airbus' fourth-quarter deliveries totaling 279 aircraft, surpassing RBC Capital's initial estimates.
The analyst noted the strong year-to-date performance of Airbus stock, which has risen roughly 10%, aligned with InvestingPro data showing a 9.58% YTD return and an impressive 23.1% gain over the past six months. He cited the company's solid order backlog, market share gains in the narrow-body (NB) segment, a net cash position, and the potential for margin expansion as core strengths. While expressing caution about the supply chain, particularly concerning engines, Herbert deemed the target of around 825 commercial deliveries for 2025 achievable. InvestingPro subscribers have access to 12 additional key insights about Airbus's performance and outlook.
Despite reduced confidence in Airbus' management following a mid-2024 guidance cut, RBC Capital believes that the fourth-quarter 2024 results present an opportunity to establish a realistic guidance and bolster investor trust in the company's execution capabilities. The firm also sees capital allocation, such as the return of capital to shareholders, as a possible positive driver, although the timing remains uncertain.
The new price target is based on a 24.5x multiple applied to the firm's forecasted 2026 free cash flow (FCF) of approximately €6 billion. Currently trading at a P/E ratio of 40.2x and showing revenue growth of 6.64%, Airbus is scheduled to report its next earnings on February 20, 2025. This multiple is higher than Airbus' historical average, but RBC Capital justifies it with the visibility of demand and potential upside in deliveries through the end of the decade.
In other recent news, Airbus concluded 2024 stronger than anticipated, despite issuing a profit warning earlier in the year. The aerospace giant reported the delivery of 766 jets, narrowly missing its target of approximately 770. CEO Guillaume Faury expressed confidence in Airbus's ability to manufacture 75 single-aisle aircraft per month by 2027, citing the company's investments and proactive hiring strategy. However, Faury also warned of escalating business risks and a deteriorating international business environment.
Analysts at BofA Securities retained a Buy rating on Airbus stock, anticipating the company's return to pre-COVID delivery levels. Despite narrowly missing its annual delivery target in 2024, Airbus remains committed to its production goals, with an emphasis on its single-aisle jets.
These developments underscore Airbus's resilience in navigating operational and market challenges. The company's recent performance and future production goals are backed by expert analysis, providing a comprehensive picture of its standing in the aerospace industry.
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