Investing.com -- Jefferies analysts have revised their assessments within the aerospace and defense sector, with a particular emphasis on Airbus and Rolls-Royce (OTC:RYCEY)
The brokerage has raised its price target for Airbus to €190 from €170, reflecting a 12% increase.
Despite the updates, Rolls-Royce remains the top investment choice within the sector. The price target for Rolls-Royce has been substantially increased by 23% to 800p from 650p.
Airbus’s improved outlook reflects favorable currency exchange rates and strong commercial aircraft sales.
Analysts anticipate a strong fourth quarter, driven by favorable delivery mix and inventory management.
This could enhance free cash flow and increase share buybacks. While OE production ramp-up presents challenges, adjusted EBIT is projected to reach about €7 billion, assuming 810-820 aircraft deliveries
Rolls-Royce has shown positive momentum, driven by currency exchange rates and improving market sentiment.
Analysts expect the company to surpass its fiscal year guidance. Currency tailwinds are estimated to contribute £200 million to EBIT by 2027.
This positive outlook is further supported by the possibility of exceeding market expectations in upcoming trading updates.
Jefferies also provided a broader assessment of the sector, noting potential volatility in the defense segment due to geopolitical uncertainties, while highlighting Continental Europe’s likely benefits from increased defense spending commitments.
The brokerage remains cautious about defense names in the UK and US, given ongoing reviews and budget uncertainties.