Safran: after halt of Boeing's Max, Oddo stays neutral
(CercleFinance.com) - An analyst at Oddo BHF this morning confirmed his "neutral" rating on the Safran share, after Boeing yesterday confirmed the temporary suspension of production of its B737 Max from January.
A decision which, the broker says, raises a lot of questions: Will the process of catching up on deliveries be spread over more than two years? Are the Max's delays and the deterioration of its image with airlines/passengers so important that Boeing must prepare to launch a new medium-haul plane? What will be the scope of the cost savings program that Boeing will launch to try to erase the additional costs stemming from the Max saga?
Oddo BHF notes that Safran has not yet communicated on the consequences of this decision on CFM, but it believes that, in order not to disrupt its own supplier chain excessively, it is highly likely that it will have to maintain a certain level of part deliveries and therefore finance own stock. (...) By assuming stabilisation of the CFM supply chain, an end to pre-payments from Boeing and a slight slowdown in production at Safran, the broker estimates that the cash cost will exceed 0.2 billion euros per month.
Thus, and although it reinstats the share's "excellent quality," Oddo BHF confirms its target price of 147 euros, representing limited upside potential of 4%.
Copyright (c) 2019 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
A decision which, the broker says, raises a lot of questions: Will the process of catching up on deliveries be spread over more than two years? Are the Max's delays and the deterioration of its image with airlines/passengers so important that Boeing must prepare to launch a new medium-haul plane? What will be the scope of the cost savings program that Boeing will launch to try to erase the additional costs stemming from the Max saga?
Oddo BHF notes that Safran has not yet communicated on the consequences of this decision on CFM, but it believes that, in order not to disrupt its own supplier chain excessively, it is highly likely that it will have to maintain a certain level of part deliveries and therefore finance own stock. (...) By assuming stabilisation of the CFM supply chain, an end to pre-payments from Boeing and a slight slowdown in production at Safran, the broker estimates that the cash cost will exceed 0.2 billion euros per month.
Thus, and although it reinstats the share's "excellent quality," Oddo BHF confirms its target price of 147 euros, representing limited upside potential of 4%.
Copyright (c) 2019 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.