DoD tests AI models that make it easy to switch from vendors like Palantir
Investing.com -- Kepler Cheuvreux upgraded Dassault Aviation (EPA:AM) to "buy" from "hold" following what it described as an excessive market reaction to the company’s weaker-than-expected first-half results.
The note dated Monday, maintained a target price of €327, reflecting a 23.3% upside from the current price of €265.20.
Dassault’s first-half performance fell short of expectations, leading to a drop in share value.
However, Kepler Cheuvreux said the decline was likely overdone and noted that Dassault reiterated its full-year guidance despite the disappointing results.
The brokerage said the outlook for the company’s core aviation business and its Rafale jet sales remains “solid.”
Kepler also said that additional tariffs on the Falcon business were not new information and may have already been priced in.
It added that Dassault has already taken steps to mitigate the impact, including reduced R&D spending.
The company’s defense business continues to benefit from order backlogs in both domestic and export markets, supported by order intake optionality across up to three potential new markets.
Kepler Cheuvreux’s valuation is based on a sum-of-the-parts methodology, using a 26.7% stake in Thales (EPA:TCFP) with a current market value of approximately €13 billion.
Dassault also holds an estimated €2.9-€3 billion in proprietary cash as of the first half.
The aerospace and defense company is valued at 10 times forward EBIT for its core aviation operations.
The brokerage left its financial forecasts largely unchanged, citing reiterated guidance of €6.5 billion in full-year sales and a stable delivery schedule.
It estimates EBIT margins to remain steady, with earnings per share expected to increase from €17.40 in 2025 to €19.75 in 2027.
Free float stands at 27.4%, and year-to-date share performance was 34.95% as of July 25. The stock’s 52-week high and low were €330.00 and €181.40, respectively.
Among sector peers, Kepler Cheuvreux named Airbus, Indra, Lisi, Rheinmetall (ETR:RHMG), and Safran (EPA:SAF) as most preferred, while Kongsberg Gruppen and Saab were least preferred.