Jefferies Revises Aerospace and Defense Sector View, Boosts Airbus and Rolls-Royce Estimates
Jefferies analysts have revised their assessments within the aerospace and defense sector, with a particular focus on Airbus and Rolls-Royce. The brokerage has raised its price target for Airbus to €190, a 12% increase from €170, reflecting favorable currency exchange rates and strong commercial aircraft sales.
Rolls-Royce remains the top investment choice within the sector, with a 23% increase in its price target to 800p from 650p. The company has shown positive momentum, driven by currency exchange rates and improving market sentiment, and analysts expect it to surpass its fiscal year guidance. Currency tailwinds are expected to contribute £200 million to EBIT by 2027.
Jefferies also provided a broader assessment of the sector, noting potential volatility in the defense segment due to geopolitical uncertainties. However, the brokerage highlighted Continental Europe’s likely benefits from increased defense spending commitments. Jefferies remains cautious about defense names in the UK and US, given ongoing reviews and budget uncertainties.
The brokerage anticipates a strong fourth quarter for Airbus, driven by a favorable delivery mix and inventory management, which could enhance free cash flow and increase share buybacks. Adjusted EBIT is projected to reach around €7 billion, assuming 810-820 aircraft deliveries.