Morgan Stanley reaffirmed its positive stance on Airbus SE (AIR:FP) (OTC: OTC:EADSY), maintaining an Overweight rating and a price target of EUR160.00. The firm analyzed the latest Cirium data, which indicated a slight decline in Airbus's aircraft deliveries for September. The company delivered 44 aircraft during the month, which is a decrease from the previous month and year-over-year.
The breakdown of September's deliveries included 5 A220s, 10 A320s, 26 A321s, 1 A330, and 2 A350s. This represented a month-over-month drop of 3 units, or 6%, and a year-over-year decrease of 11 units, or 20%. Despite this, the year-to-date deliveries until the end of September reached 491 units, showing a slight increase of 1% compared to the same period last year, which had 488 units.
To reach the full-year delivery guidance of 770 aircraft, Airbus would need to deliver 279 units in the fourth quarter. This number of deliveries in a single quarter has not been seen since before the COVID-19 pandemic, sparking discussions about the feasibility of meeting the annual targets. A key point of interest is whether Airbus is accumulating inventory of 'gliders,' which are aircrafts lacking engines. If engine supplies improve in the fourth quarter, these gliders could help Airbus achieve its delivery goals.
Morgan Stanley's analysis suggests that drawing concrete conclusions from a single month's data is difficult. However, the firm notes that the challenge of meeting the full-year guidance is becoming increasingly apparent as the end of the year approaches.
In other recent news, Airbus SE's aircraft deliveries have been lagging behind their annual target due to supply chain issues, including engine shortages. Despite a history of ramping up deliveries in the last quarter, internal production challenges may hinder recovery. Analysts from Agency Partners have expressed concerns over Airbus's production ramp-up, particularly beyond 2024.
Honeywell International Inc (NASDAQ:HON). has indicated that its aerospace division's growth will largely depend on its ability to supply parts to major aircraft manufacturers like Airbus. The aerospace industry is currently grappling with part shortages and labor issues, which are preventing it from fully leveraging the surge in aviation demand.
Saudi Arabia's Public Investment Fund is considering acquiring jets from Airbus and Boeing (NYSE:BA) for a new cargo airline initiative. This move aligns with Saudi Arabia's broader economic diversification efforts.
Airbus is also under a criminal investigation by the United Kingdom's Revenue and Customs agency for potential breaches of export control rules. The company has stated that it is cooperating fully with the investigation and does not anticipate a significant impact on its financial health.
Lastly, Airbus's second-quarter financial results were recently disclosed, leading to a rise in its share value. However, it is important to note that the company's future performance is heavily dependent on its ability to overcome current supply chain challenges.
InvestingPro Insights
To complement Morgan Stanley's analysis, InvestingPro data provides additional context on Airbus's financial performance and market position. Despite the recent delivery challenges, Airbus maintains a strong market cap of $115.54 billion, reflecting its prominence in the Aerospace & Defense industry.
The company's P/E ratio of 33.59 suggests that investors are pricing in future growth expectations, aligning with the "InvestingPro Tip" that Airbus is trading at a high earnings multiple. This valuation metric becomes particularly relevant as the company strives to meet its ambitious delivery targets for the year.
Another "InvestingPro Tip" highlights that Airbus holds more cash than debt on its balance sheet, which could provide financial flexibility as the company navigates supply chain challenges and potentially ramps up production to meet year-end goals.
For investors seeking a deeper understanding of Airbus's financial health and market position, InvestingPro offers 9 additional tips, providing a comprehensive view of the company's strengths and potential risks in the current market environment.
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