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On Thursday, Jefferies began coverage on Dassault Aviation SA (AM:FP) (OTC: DUAVF), assigning the stock a Buy rating and setting a price target of EUR350.00. The firm’s analysts highlighted the company’s potential due to its involvement with the Rafale fighter jet and anticipated production increases. They expect the rate to grow from the equivalent of two per month in 2024 to four per month, with a possibility of reaching five per month in the coming years.
The analysts at Jefferies acknowledged the challenges faced by the Future Combat Air System (FCAS) but expressed confidence in Dassault Aviation’s strategic position. They suggest that France might choose to continue enhancing the Rafale or develop a new 6th generation aircraft rather than join the Global Combat Air Programme (GCAP).
The report also pointed to a likely rise in profit margins for Dassault Aviation, driven by reduced research and development (R&D) spending on its Falcon business jets lineup. This anticipated margin growth is seen as a key factor contributing to the positive outlook on the stock.
Dassault Aviation’s exposure to the Rafale program and the potential for increased production rates are central to Jefferies’ optimistic stance. The analysts believe that these factors, combined with the expected margin expansion, position the company for an attractive future performance.
The price target of EUR350.00 set by Jefferies reflects a significant level of confidence in Dassault Aviation’s stock, as the firm initiates coverage with a bullish perspective. This valuation anticipates the positive developments outlined by the analysts, including production ramp-up and margin improvements.
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