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Airbus (OTCPK:EADSY) (OTCPK:EADSF) late Thursday was rated Sector Perform in new coverage by analysts at RBC Capital Markets. They said the world’s biggest maker of airplanes faces ongoing supply-chain constraints that will limit deliveries of new jets to airlines.
“Airbus (OTCPK:EADSY) (OTCPK:EADSF) is poised to push production aggressively into the strong demand environment, but we see continued supply chain stress limiting the 2025 and mid-decade upside,” Ken Herbert, analyst at RBC, said in a June 15 report. “With the stock trading at the mid-point of historical valuation ranges, we see limited near-term upside.”
RBC set a price target of 140 euros a share for Airbus’s (OTCPK:EADSY) (OTCPK:EADSF) stock, based on a multiple of 21.8 times estimated free cash flow of 6.46 euros a share in 2024. The stock traded at 132.02 euros a share in Paris as of 5 p.m. local time.
Next week's International Paris Air Show is expected to coincide with multiple orders for new planes from Airbus (OTCPK:EADSY) (OTCPK:EADSF) and rival Boeing (NYSE:BA).
"While we would support owning Airbus (OTCPK:EADSY) (OTCPK:EADSF) over Boeing (BA) for a number of reasons, we believe investors will benefit from greater commercial aftermarket exposure through 2023, and we see risk to the full-year 2023 and mid-decade Airbus delivery guidance," according to RBC.
Seeking Alpha contributor Dhierin Bechai said gains in Airbus's (OTCPK:EADSY) (OTCPK:EADSF) stock may be limited as Boeing (BA) ramps up deliveries after being sidelined with safety and mechanical issues, along with supply-chain hurdles. Airbus's (OTCPK:EADSY) (OTCPK:EADSF) efforts to introduce new planes such as the A350F, A321LXR and a bigger version of the A220 also have been hampered, he said.
| RBC Capital's investment ratings for aerospace & defense stocks, June 16 | |
| Company (ticker) | Rating |
| AAR Corp. (NYSE:AIR) | Outperform |
| AeroVironment Inc. (NASDAQ:AVAV) | Outperform |
| AerSale Corp. (NASDAQ:ASLE) | Outperform |
| Airbus SE (OTCPK:EADSF) (OTCPK:EADSY) | Sector Perform |
| Ducommun Inc. (NYSE:DCO) | Outperform |
| General Dynamics Corp. (NYSE:GD) | Outperform |
| Heico Corp. (NYSE:HEI) | Restricted |
| Hexcel Inc. (NYSE:HXL) | Sector Perform |
| Kratos Defense & Security Systems Inc. (NASDAQ:KTOS) | Outperform |
| L3Harris Technologies Inc. (NYSE:LHX) | Outperform |
| Leidos Holdings Inc. (NYSE:LDOS) | Sector Perform |
| Lockheed Martin Corp. (NYSE:LMT) | Sector Perform |
| MDA Ltd. (MDA:CA) | Outperform |
| Mercury Systems Inc. (NASDAQ:MRCY) | Sector Perform |
| Northrop Grumman Corp. (NYSE:NOC) | Outperform |
| Raytheon Technologies Corp. (NYSE:RTX) | Outperform |
| Spirit AeroSystems Holdings Inc. (NYSE:SPR) | Sector Perform |
| Boeing Co. (BA) | Sector Perform |
| TransDigm Group Inc. (NYSE:TDG) | Outperform |
| V2X Inc. (NYSE:VVX) | Outperform |
| VSE Corp. (NASDAQ:VSEC) | Outperform |
| RBC Capital's estimates for Airbus and Boeing orders in China and Hong Kong | |||
| Assumptions through 2030 | Scenario analysis | ||
| Seat capacity CAGR | 6% | 7% | 8% |
| Ending active fleet | 6,899 | 7,438 | 8,012 |
| Assumptions from 2025-2030 | |||
| Active fleet at end of 2025 | 5,150 | 5,150 | 5,150 |
| Retirements as 1% of active fleet | (308) | (326) | (345) |
| Assumptions for total lease changes | (25) | (25) | (25) |
| Implied deliveries from capacity growth | 1,416 | 1,937 | 2,492 |
| 250 deliveries for COMAC | (250) | (250) | (250) |
| Backlog after 2025 | 698 | 698 | 698 |
| 50% of undisclosed orders | 620 | 620 | 620 |
| Backlog subtotal | 1,318 | 1,318 | 1,318 |
| Implied orders to support future fleet | (152) | 369 | 924 |
| Source: Company reports, Cirium and RBC Capital Markets | |||