Al Root
Airbus stock rose Tuesday after catching an upgrade. It's good news for Boeing shares, too.
Tuesday, Deutsche Bank analyst Christophe Menard upgraded Airbus stock to Buy from Hold. His price target went to EUR185 ($194) from EUR155 ($163).
Airbus stock was up 1.4% in overseas trading on Tuesday. Boeing shares were flat in premarket trading, at about $173 a share, while S&P 500 and Dow Jones Industrial Average futures were down 0.4% and 0.5%, respectively.
"Driving our upgrade is the group's relative affordability," wrote Menard. The company is valued at about 13.7 times the 2026 estimated operating profit.
Industrial companies in the S&P 500 trade for about 17 times estimated 2026 operating profit, according to FactSet. Boeing shares trade for about 25 times estimated 2026 operating profit, although Boeing is still digging out from years of design and quality problems. It hasn't reported a full-year profit since 2018.
Menard also sees December delivering about 120 planes in December. One month's deliveries aren't all that important a data point for Airbus or Boeing, but supply chain constraints have impacted both companies' production in 2024, and solid December deliveries are "an indication that Airbus has better control over its supply chain."
Improving supply is good news for both airplane makers.
Looking ahead, Wall Street sees Airbus delivering about 820 jets in 2025, up from about 760 in 2024. Airbus' peak year for deliveries was 2019 when it delivered 863 planes.
Boeing is expected to deliver about 570 planes in 2025 after delivering about 360 in 2024. The Jan. 5 emergency-door plug blowout, and labor strike that began in September and lasted about seven weeks, both impacted Boeing production. Its peak year for deliveries was 2018 when Boeing delivered 806 jets.
Coming into Tuesday trading, Airbus stock was up about 7% year to date, trailing the market. Improving deliveries should help shares -- and the valuation multiple -- in 2025. The same goes for Boeing. Its shares were down about 34% year to date.
Deutsche Bank analyst Scott Deuschle covers Boeing stock with a Buy rating and $184 price target, according to FactSet. However, Wall Street seems to favor Airbus stock, judging by the percentage of bullish ratings by analysts.
Overall, about 87% of analysts covering Airbus stock have Buy ratings, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for Airbus shares is about EUR167 ($176) a share. About 53% of analysts who cover Boeing stock have Buy ratings, and the average price target is about $181.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 17, 2024 09:59 ET (14:59 GMT)
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