BofA says Airbus purchase of Spirit Aero will de-risk medium-term ramp
Analysts at Bank of America kept their recommendation for shares of Airbus at a 'buy' following news that it had acquired the operations of Spirit Aero linked to its jets.
Airbus Group N.V.
€136.10
16:40 04/07/24
CAC 40
7,695.78
17:00 04/07/24
DJ EURO STOXX 50
4,965.80
23:58 03/07/24
They judged the purchase - which was set to close in mid-2025 - to be "positive", adding that it would help to de-risk its ramp in production over the medium-term.
Near-term on the other hand the transaction was expected to be a drag on margins, which led them to trim their estimates for operating profit in 2025 by about 2-3%.
Earnings before interest and tax at Airbus's Commercial operations would be around €200m lower in 2025 as a result of the acquisition and capital outlays would need to be increased by about €50m annually.
BofA lowered its target price from €174 per share to €170.
The analysts also believed that buying parts of Spirit Aero would production rates of 14 and 12 A220s and A350s per month in 2026 and 2028, respectively.
"Execution & delivery watching will remain the near-term focus. Yet we remain buyers on attractive valuation (c.10x EV/EBIT 2026E) & strong demand environment."