RBC upgrades Airbus to Outperform on stock gains and production momentum

© Reuters. RBC analyst upgrades Airbus to Outperform on stock gains and production momentum

Airbus (EADSY (OTC:)) stock was upgraded to Outperform from Sector Perform by RBC Capital Markets analysts on Tuesday, alongside a target price hike to €192 from €145.

“We believe the recent positive shift in sentiment has room to run as recent NB share gains could expand further and investor confidence in the mid-decade targets improves,” analysts said in a note.

The company’s shares have embarked on a strong uptrend recently, rising 17% since the start of the year.

This positive shift in investor sentiment can be attributed to several key factors: Airbus’s robust delivery performance in 2023, with 735 aircraft delivered against a forecast of approximately 700; ongoing execution challenges at competitor Boeing (NYSE:); and a well-received initial outlook for 2024.

As of February, Airbus has already delivered 79 aircraft for the year, including 65 from the critical A320 family.

“We have incremental confidence in our 2024 and 2025 delivery assumptions of 815 and 930, respectively. The 2024 guide is 800 aircraft, which we believe AIR-FR will exceed,” analysts wrote.

As of mid-March, Airbus has successfully delivered 43 A320 aircraft equipped with the Pratt & Whitney GTF engine.

Initial concerns over the potential impact of GTF engine issues on Airbus’s delivery schedule “appear so far to have been overdone,” the analysts said, “as Airbus has put the GTF risk on the aftermarket.”