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Investing.com - UBS downgraded MTU Aero Engines (ETR:MTX) (OTC:MTUAY) from Buy to Neutral on Thursday, while reducing its price target to EUR400.00 from EUR485.00.
The downgrade reflects UBS’s belief that the engine aftermarket "beat and raise cycle is coming to an end," according to the research note. The firm acknowledged the possibility of a guidance upgrade for Commercial Spares growth in the second half of the year, but expects 2026 guidance to likely align with market expectations.
UBS still sees upside potential to consensus expectations for 2030 free cash flow, noting that awareness of near-term headwinds from imbalance payments remains "very low within the investment community."
The investment bank does not expect strong cash flow generation to become visible before 2028, or possibly 2027, which contributed to its reduced confidence in the near-term investment case.
Despite the downgrade, UBS maintained a price target of EUR400.00 for the German aircraft engine manufacturer, representing a significant reduction from its previous target of EUR485.00.
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