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On Friday, Berenberg analysts upgraded Airbus SE (AIR:FP) (OTC: OTC:EADSY) stock rating from Sell to Hold, while also increasing the price target from EUR109.00 to EUR140.00. The move comes after a two-year period during which Berenberg held a bearish stance on the European aerospace giant, which currently commands a market capitalization of $142.5 billion. According to InvestingPro data, the stock has shown strong momentum with a 24% gain over the past six months and trades near its 52-week high of $47.50.
The upgrade was influenced by a reassessment of Airbus’s future performance and market expectations. Berenberg’s previous Sell rating was based on three key concerns: overly optimistic consensus aircraft delivery forecasts from 2024 to 2027, lower operating leverage from reduced volumes than the market had anticipated, and margin pressure from cost inflation lag effects. InvestingPro analysis shows the stock currently trades at a P/E ratio of 31.2x, suggesting premium valuation levels relative to near-term earnings growth potential.
However, the firm noted that after significant reductions in forward estimates, including approximately a 30% cut to FY25/26 adjusted EPS, their outlook is now aligned with the consensus view. This alignment prompted Berenberg to adjust its position on Airbus stock. The company maintains a strong financial position, with InvestingPro data indicating more cash than debt on its balance sheet and a healthy current ratio of 1.15.
The Berenberg analyst provided a candid explanation for the upgrade: "We have sought to provide a candid assessment as the lone ’bear’ on Airbus for two straight years... After a material and multi-year reduction to forward estimates since we downgraded to Sell, we are no longer out of alignment with consensus, hence our upgrade to Hold." Analyst targets now range from $29.70 to $62.39, reflecting diverse views on the company’s prospects.
Airbus SE has faced various challenges in the past few years, including supply chain issues and cost inflation, which have impacted its earnings and cash returns. The reassessment by Berenberg suggests a more stable outlook for the company, as reflected in the revised price target and stock rating.
Investors and market watchers will likely monitor Airbus’s performance closely to see if the company can meet the adjusted expectations and navigate the ongoing industry challenges.
In other recent news, Airbus has been actively involved in several significant developments. The company reported a decrease in aircraft deliveries, with 65 aircraft delivered in the first two months of 2021, marking an 18% drop compared to the previous year. Despite this, Airbus received 14 new orders in February, bringing the total to 69 for the year, with net orders reaching 65 after cancellations. On a positive note, Airbus secured 118 commitments for its multimission helicopters, including 63 firm orders, at a U.S. trade show, showcasing strong interest in its newly unveiled H140 model.
Additionally, Airbus is poised to benefit from increased defense spending in Europe, with RBC Capital Markets maintaining an Outperform rating and a €185 price target for the company’s stock. The potential acquisition of the SPR mid-2025 work package is seen as a strategic move that could enhance Airbus’s market position. Meanwhile, Japan Airlines announced plans to expand its fleet with additional orders from both Boeing (NYSE:BA) and Airbus, including 11 Airbus A321neo aircraft, as part of its modernization strategy. These recent developments highlight Airbus’s strategic initiatives and ongoing efforts to navigate industry challenges.
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