On Tuesday, JPMorgan (NYSE:JPM) adjusted its price target for Airbus SE (AIR:FP) (OTC: OTC:EADSY), bringing it down to €172 from the previous €195, while maintaining an Overweight rating on the stock. This decision follows Airbus's profit warning issued after the market closed on Monday, citing a charge on satellite programs and escalating problems within the civil aerospace supply chain.
Airbus's earnings per share (EPS) estimates for the years 2024-2027 have been revised downwards by 18%, 9%, 12%, and 13% respectively by the analyst. The decrease in the price target for December 2025 reflects these lowered EPS forecasts, marking a 12% reduction. The analyst has cited two primary reasons for retaining the Overweight rating: the anticipation of a warning already factored into the current share price, which has seen a 13% drop from its peak in March 2024, and the unchanged robust demand for new aircraft, despite supply issues.
The analyst expects that Airbus shares will likely open at least 5% lower on Tuesday due to the profit warning. However, it is believed that this anticipated dip in share price could present a buying opportunity for long-term investors. The firm's medium-term delivery targets are still expected to be met by Airbus, albeit later than initially planned.
The profit warning and subsequent price target adjustment by JPMorgan reflect the ongoing challenges faced by Airbus in the civil aerospace sector. Despite these hurdles, the firm's stance suggests confidence in the company's ability to overcome supply chain difficulties and meet its delivery goals in the medium term.
In other recent news, Airbus has been the focus of several developments. The aerospace manufacturer has revised its fiscal year 2024 forecast due to supply chain challenges, reducing its delivery guidance by about 4% to 770 aircraft. Airbus's earnings before interest and taxes (EBIT) forecast for FY24 has also been reduced by roughly 20%, with free cash flow (FCF) expectations trimmed by about 13%. Amid these changes, Deutsche Bank (ETR:DBKGn) has downgraded Airbus's stock from Buy to Hold, reducing its price target to €155. In contrast, Morgan Stanley (NYSE:MS) has maintained its Overweight rating on Airbus with a steady price target of EUR190.00.
Further, Airbus has communicated plans to enforce mandatory weekend overtime at its A220 plant near Montreal to address ongoing production delays due to supply chain issues and shortages of parts and labor. The U.S. Federal Aviation Administration (FAA) is also investigating Airbus for the use of counterfeit titanium parts in their jets, which could potentially impact manufacturing processes in the aviation industry. These are among the recent developments involving Airbus.
InvestingPro Insights
As investors digest the implications of JPMorgan's revised price target for Airbus SE, real-time data from InvestingPro provides additional context to the company's financial health and market performance. Airbus holds a market capitalization of $114.74 billion, with a P/E ratio standing at 27.36. Notably, the revenue growth over the last twelve months as of Q1 2024 has been a solid 13.65%, indicating robust business expansion despite the supply chain challenges mentioned.
Two key InvestingPro Tips for Airbus are particularly relevant in light of the article's discussion. Firstly, Airbus has raised its dividend for three consecutive years, signaling confidence in its financial stability and commitment to shareholder returns. Secondly, despite the recent challenges, analysts predict that the company will remain profitable this year, which may reassure investors looking at the long-term prospects of Airbus.
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