On Thursday, Bernstein SocGen Group adjusted its financial outlook for Airbus SE (AIR:FP) (OTC: OTC:EADSY), reducing the price target from €170.00 to €160.00 but maintaining an Outperform rating on the stock. The adjustment comes amidst revised forecasts for the aerospace giant's future deliveries and earnings before interest and taxes (EBIT).
The firm now anticipates Airbus will deliver 750 aircraft in 2024, a decrease from the previous estimate of 770. Correspondingly, the EBIT forecast for the same year has been lowered to €5.3 billion from an earlier projection of €5.5 billion. The analyst suggests that Airbus might uphold its guidance during the third-quarter earnings announcement, opting to evaluate its fourth-quarter performance before making further decisions.
The analyst noted that Airbus has historically achieved significant delivery volumes in December, such as in 2018 and 2019, and does not require physical delivery of an airplane to record it. However, should Airbus find its targets unattainable by early December, it may choose to withdraw its guidance, as it did in 2022.
Looking further ahead, the firm has also scaled back its 2025 delivery forecast for Airbus to 820 aircraft from the previously expected 870. The new EBIT estimate for 2025 stands at €7.1 billion. The anticipated increase in EBIT from 2024 to 2025 is attributed to 70 additional aircraft deliveries, a partial reversal of this year's Space charges, and benefits from currency hedging.
In a longer-term perspective, Bernstein SocGen Group has deferred its 2026/27 forecasts for Airbus to 2027/28, taking a more conservative stance on the company's production ramp-up due to potential ongoing supplier issues. The analyst also mentioned that the recent Boeing (NYSE:BA) strike could indirectly affect Airbus negatively if shared suppliers experience financial strain.
In other recent news, Airbus SE has been facing challenges in meeting its full-year delivery guidance of 770 aircraft due to supply chain issues and engine shortages. According to Morgan Stanley, Airbus delivered 44 aircraft in September, reflecting a decrease from the previous month and year-over-year.
However, year-to-date deliveries until the end of September showed a slight increase of 1% compared to the same period last year. The aerospace industry, including key suppliers like Honeywell International Inc (NASDAQ:HON)., is grappling with part shortages and labor issues, which could impact Airbus's ability to meet its delivery goals.
In a separate development, Airbus is under investigation by the United Kingdom's Revenue and Customs agency for potential breaches of export control rules. Meanwhile, Saudi Arabia's Public Investment Fund is considering acquiring jets from Airbus for a new cargo airline initiative, aligning with the country's broader economic diversification efforts.
Recent analyst notes from Morgan Stanley reaffirmed an Overweight rating on Airbus, while Agency Partners expressed concerns over Airbus's production ramp-up, particularly beyond 2024. Despite facing these challenges, Airbus's second-quarter financial results were recently disclosed, emphasizing the company's dependency on overcoming current supply chain challenges.
InvestingPro Insights
To complement Bernstein SocGen Group's analysis of Airbus SE (OTC: EADSY), recent data from InvestingPro offers additional context for investors. Despite the reduced price target, Airbus maintains a substantial market capitalization of $110.37 billion, underscoring its position as a major player in the aerospace industry.
InvestingPro Tips highlight that Airbus "holds more cash than debt on its balance sheet," which could provide financial flexibility as the company navigates potential production challenges and market uncertainties. This strong cash position aligns with the analyst's cautious outlook on delivery forecasts and potential supplier issues.
The company's revenue growth of 8.1% over the last twelve months, as reported by InvestingPro, suggests ongoing demand for Airbus products, even as analysts adjust their delivery expectations. However, with a P/E ratio of 32.7, Airbus is "trading at a high earnings multiple," which investors should consider in light of the revised growth projections.
For those seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Airbus, providing deeper insights into the company's financial health and market position.
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