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On Tuesday, Bernstein analysts, led by Douglas S. Harned, maintained their Outperform rating on Airbus stock, alongside a price target of €180.00. The aerospace giant, currently trading near its 52-week high with a market capitalization of $142.8 billion, faces heightened scrutiny as it approaches its earnings report on February 20. The focus for investors, according to Harned, should shift towards the company’s delivery guidance for 2025 and its margin outlook. Despite the firm’s previous reduction of delivery assumptions to 820 aircraft, sell-side consensus remains slightly more optimistic, anticipating 839 deliveries. According to InvestingPro, analysts have recently revised earnings expectations upward for the upcoming period.
Airbus has encountered several supply chain challenges, particularly with engines, interiors, and structures. However, recent statements from major suppliers such as GE, Safran (EPA:SAF), and RTX regarding deliveries of LEAP and GTF engines have been positive. The start of 2025 has seen a slower pace with Airbus delivering only 20 A320s and 2 A350s in January, followed by a mere 10 A320s in February to date, with no A350 deliveries. Despite these challenges, the company has maintained a 6.64% revenue growth over the last twelve months, though InvestingPro data indicates relatively weak gross profit margins at 15%.
The number of first flights has increased, which suggests that delivery volumes might be more concentrated towards the latter part of the year. Bernstein expects this trend of back-loaded deliveries to continue into 2025. Additionally, progress toward achieving the target production rate of 75 A320s per month is being closely monitored, with the A350’s interior supply issues being a critical factor to watch.
Despite these challenges, Harned remains positive on Airbus’s long-term prospects. The company is seen as attractive due to high demand and a strong competitive position in the market. However, the analyst acknowledges that the ongoing supply chain issues represent a significant barrier that the aerospace giant needs to navigate. Trading at a P/E ratio of 41.9, Airbus commands a premium valuation, with analysts forecasting EPS of $5.37 for fiscal year 2024. For deeper insights into Airbus’s financial health and additional ProTips, visit InvestingPro, where subscribers can access comprehensive analysis and valuation metrics.
In other recent news, Riyadh Air, a Saudi Arabian startup airline, is reportedly in discussions with Boeing (NYSE:BA) and Airbus for a potential order of up to 50 additional widebody aircraft. This move is part of the airline’s strategy to expand its fleet. In parallel, Leonardo’s CEO, Roberto Cingolani, has confirmed discussions with Airbus regarding potential alliances in the satellite industry, aiming to strengthen Europe’s position against global competition.
Meanwhile, Airbus ended 2024 stronger than expected, despite a profit warning issued earlier that year. The CEO, Guillaume Faury, however, warned of a worsening international climate and escalating business risks. On the financial front, RBC Capital Markets revised its outlook on Airbus, raising the price target to €185 from the previous €185 while maintaining the Outperform rating.
These are just some of the recent developments concerning Airbus and other companies in the aviation sector. It’s important to note that these updates are based on recent events and analysis, and should be considered in the context of the dynamic nature of the industry.
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