Investment Update on Airbus Group SE

Citi Research Increases Target Price
Citi Research has raised its target price for Airbus Group SE (EPA:AIR) to €184, up from €182.

2024 Delivery Guidance Adjusted
Airbus aims for the lower end of its 2024 delivery guidance, targeting 750 aircraft instead of 770. Citi analysts consider this a sensible adjustment given current production and supply chain challenges.

Long-term Growth Prospects Remain Strong
Despite the reduction, Airbus's long-term growth potential stays solid. Citi maintains a "buy" rating, citing strong demand for commercial aircraft and a ramp-up in delivery rates by the decade's end.

Quarterly Update Reiterates Guidance
In its recent update, Airbus confirmed its 2024 delivery guidance while shifting realistically to the lower range due to ongoing supply chain difficulties. Analysts reported, "We have reduced our 2024 deliveries from 770 to 750."

Profit Expectations Revised
This adjustment slightly lowers near-term profit expectations. The 2024 EBIT forecast is reduced by 5% to €5.25 billion, and cash flow forecasts have decreased by 15% to €3 billion.

Sustained Production Goals
Citi analysts express confidence in Airbus’s broader outlook, noting that the current valuation does not fully account for increased production potential, anticipating a future production rate of 75 A320 family aircraft by 2027.

Market Pricing Versus Capacity
Airbus currently delivers about 52 aircraft per month. Citi notes the market has priced a sustained rate of 60 monthly, suggesting upward potential if Airbus meets ramp-up goals. This discrepancy supports Citi's positive rating despite near-term forecast reductions.

Ongoing Challenges and Long-term Outlook
Airbus faces supply chain delays and currency fluctuations, yet solid demand is expected to sustain high production levels. Citi projects significant growth in profit from 2024 to 2029, supporting the increased target price.

Cash Flow Efficiency Improvement
Citi's valuation includes upgraded cash conversion rates from 93% to 95%, helping mitigate the impact of lower profit projections and exchange rate assumptions.

Potential Risks Identified
Citi warns of risks such as delivery uncertainties, shifts in global demand, currency fluctuations, and complex operations affecting forecasts.

Market Activity
Shares of Airbus Group were trading 1.9% higher on Wednesday at €144.44.