Morgan Stanley | Ross Law (analyst) reiterates Airbus as his Top Pick, raising estimates and Target Price after Q3 results. Although Ross maintains his ‘lower and later’ hypothesis for aircraft production rates, which puts him 7% below the consensus on average deliveries for FY26-30 (range 3-10%), his financial forecasts are more aligned, as he believes that the expansion of gross margin due to mix, pricing power and production efficiencies is not reflected in the consensus. He also sees upside potential from higher capital returns.
The stock has revalued to 14x EV/EBIT 2027e, trading in line with the sector, which Ross considers undemanding. It raises revenue and adjusted EBIT estimates by 1-2%, with its new Target Price at €250 (from €232), assuming 18.5x EV/EBIT 2027e and offering ~17% upside.
Airbus, Overweight, from €231 to €250.
