On Monday, Morgan Stanley (NYSE:MS) kept its Overweight rating on Airbus (AIR:FP) (OTC: EADSY (OTC:EADSY)), with a steady price target of EUR190.00, despite the aerospace manufacturer's lowered forecasts for fiscal year 2024. Airbus has reduced its delivery guidance by approximately 4% to 770 aircraft from the previous estimate of around 800, citing ongoing supply chain challenges, particularly with engines, aerostructures, and cabin equipment.
The company's earnings before interest and taxes (EBIT) forecast for FY24 has also been reduced by roughly 20% to an estimated EUR5.5 billion, down from the previous range of EUR6.5 billion to EUR7.0 billion. Free cash flow (FCF) expectations were trimmed by about 13% to EUR3.5 billion from the initial forecast of around EUR4.0 billion. Additionally, Airbus has delayed its target production rate of 75 planes per month for the A320 program by one year, now aiming for 2027.
Airbus has also disclosed a significant charge of GBP0.9 billion related to its space programs. This charge comes as a result of a comprehensive technical review of all space-related programs. The announcement marks a notable shift from recent communications, as the company had reaffirmed its guidance not long before this update.
In other recent news, the U.S. Federal Aviation Administration (FAA) is investigating Boeing (NYSE:BA) and Airbus for the use of counterfeit titanium parts in their jets. The FAA's findings could potentially impact manufacturing processes and regulatory practices in the aviation industry. Meanwhile, Airbus is planning to enforce mandatory weekend overtime at its A220 plant near Montreal to address ongoing production delays. This move is in response to supply chain issues and shortages of parts and labor, which have contributed to production lags.
In a related development, Deutsche Bank (ETR:DBKGn) has maintained its Buy rating on Airbus, despite a slight adjustment in their delivery estimate for 2024 due to disruptions noted in May. The bank's decision comes after Airbus reported a decline in aircraft deliveries for the month. In other recent developments, Qatar Airways is in talks with Airbus and Boeing for a significant order of wide-body jets, including the Airbus A350 and Boeing's 777X. The exact details of the potential deal remain undisclosed.
Lastly, Christian Scherer, CEO of Airbus' Commercial Aircraft business, has expressed concern over recent safety and quality problems at Boeing, emphasizing that such issues could undermine public confidence in air travel. Despite this, Scherer clarified that Airbus' pricing strategy is based on current market conditions and not on Boeing's difficulties.
InvestingPro Insights
In light of Morgan Stanley's continued support for Airbus despite the company's lowered forecasts, current financial metrics and analyst insights from InvestingPro provide additional context. With a Market Cap of $126.37B and a P/E Ratio standing at 30, Airbus appears to be trading at a high earnings multiple. The company's Price / Book ratio is also on the higher side at 6.38, indicating that the stock may be priced at a premium relative to its book value.
InvestingPro Tips highlight that Airbus has more cash than debt on its balance sheet, which could provide some financial flexibility in addressing its supply chain challenges. Additionally, Airbus has a history of raising its dividend for 3 consecutive years, which may be of interest to income-focused investors. On the flip side, 3 analysts have revised their earnings downwards for the upcoming period, suggesting that the market may have concerns about near-term growth prospects.
For investors seeking a deeper analysis, there are additional PRONEWS24 InvestingPro Tips available which could offer further insights into Airbus's financial health and stock performance. Using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription to access these valuable tips.
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