Airbus: Credit Suisse no longer a buyer due to dollar
(CercleFinance.com) - Credit Suisse has downgraded its buy ("outperform") rating on the Airbus share "neutral," with analysts also removing it from the broker's Focus List.
Analysts now primarily believe that "FX leaves little room for growth post-2020E." Alongside this downgrade, analysts have cut their target price for the share from 95 euros to 91 euros.
"On our estimates, USD weakness limits EPS growth prospects post-2020E to 6-7% p.a. vs a 25-30% annual expansion in 2018E-20E," says the broker's report. Admittedly, the strong trend of free cash flow, which underlies Airbus' 43% outperformance of the Stoxx 600 index in 2017, "remains solid". Anyway, sentiment on the stock should suffer "what we view as an inevitable slowdown," Credit Suisse states in its report.
Credit Suisse has raised its FX estimate for the euro in its estimates for Airbus from 1.15 dollar to 1.25 dollar. “The impact is limited for 2020 due to existing hedges, but it halves the EBIT growth we could have otherwise expected for 2021-22 (which would essentially be driven by the A350 maturation)” Credit Suisse calculates. Analysts have trimmed their earnings estimates for the group, which explains the reduction their target price.
Copyright (c) 2018 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.
Analysts now primarily believe that "FX leaves little room for growth post-2020E." Alongside this downgrade, analysts have cut their target price for the share from 95 euros to 91 euros.
"On our estimates, USD weakness limits EPS growth prospects post-2020E to 6-7% p.a. vs a 25-30% annual expansion in 2018E-20E," says the broker's report. Admittedly, the strong trend of free cash flow, which underlies Airbus' 43% outperformance of the Stoxx 600 index in 2017, "remains solid". Anyway, sentiment on the stock should suffer "what we view as an inevitable slowdown," Credit Suisse states in its report.
Credit Suisse has raised its FX estimate for the euro in its estimates for Airbus from 1.15 dollar to 1.25 dollar. “The impact is limited for 2020 due to existing hedges, but it halves the EBIT growth we could have otherwise expected for 2021-22 (which would essentially be driven by the A350 maturation)” Credit Suisse calculates. Analysts have trimmed their earnings estimates for the group, which explains the reduction their target price.
Copyright (c) 2018 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.