The tense supply chains keep the manufacturer in suspense. Analysts reacted to the price targets with the red pencil, the share fell by almost two percent on Wednesday morning. The confirmed financial targets could not reassure the investors at first, but the analysts only see a dip in the price weakness.
Airbus cannot deliver as many new machines as planned this year. The actual number should not be significantly below the 700 deliveries planned last, the DAX 40 group surprisingly announced on Tuesday evening in Toulouse. The management is also reviewing the pace of production expansion for the highly sought-after medium-haul jets of the A320neo family – in view of the tight supply chains. By 2025, however, production of the series is set to increase further to 75 machines per month.
Despite the lower deliveries, Airbus management is sticking to its forecasts for adjusted operating profit (EBIT) and free cash flow. The top management is still aiming for an adjusted operating profit of around 5.5 billion euros for 2022, the free cash flow before mergers and customer financing should be 4.5 billion euros.
The US bank JPMorgan has now lowered the price target for Airbus from 185 to 170 euros, but left the rating at “Overweight”. He has lowered his earnings forecasts (EPS) for the years 2023 to 2025 because of the latest news, analyst David Perry wrote in a study available on Wednesday. However, long-term investors could use the now expected short-term price dip as an entry point, he recommended.
The experts from the analysis house Stifel also recommend using the price weakness to get started. The analysis house Jefferies takes a similar view. The pressure on the share will be rather limited, it said. Especially since the confirmation of the financial targets – despite the reduction in the delivery target – shows Airbus’ conservative approach to its forecast. Analyst Chloe Lemarie is sticking to her “buy” recommendation for Airbus, having reduced her earnings forecast only slightly. However, the exchange rate ratio will become less favorable for Airbus, which should be more noticeable in the years 2023 to 2024 than deliveries.
For this reason, analyst Harry Breach from the investment house Stifel reduced the earnings estimates per share for 2022 and 2023. However, there has recently been some skepticism on the market regarding Airbus’ delivery and production targets. The bottom line is that it is only “moderately negative” news.
Airbus boss Guillaume Faury had already cut his delivery target for 2022 from 720 to 700 aircraft in the summer. In addition, the production of the A320neo model family should only reach 65 machines per month since the beginning of 2024, half a year later than previously targeted. Now the group wants to adjust this plan again.
Before the corona pandemic, the manufacturer had built around 60 machines in the series every month. After throttling down to around 40 jets a month, he recently increased production to 50 again. However, further expansion has stalled, also due to delays at suppliers.
In the twelve months ended November, Airbus delivered a total of 565 commercial aircraft, 68 of which in November. Meanwhile, orders for 29 machines were received in the past month, but the group also received 14 cancellations. The order backlog is now at 7344 aircraft, it said.
Pre-pandemic production numbers are still out of reach, also because of the recent setback. In 2019, the European manufacturer set a record with 863 deliveries of commercial aircraft and snatched the position as the world’s largest aircraft manufacturer from its troubled rival Boeing from the USA. Airbus wants to give details on order and delivery figures for 2022 on January 10th, the annual figures will follow on February 16th.
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