France-based Airbus Group SE (FR:AIR) reported a significant drop in its H1 profits due to pre-announced charges in its Space Systems division, which eclipsed revenue growth. The company’s adjusted EBIT (earnings before interest and tax) declined 47% year-over-year to €1.4 billion in the first half. Meanwhile, revenues grew by 4% to €28.8 billion during the period.
Airbus Group is a leading European aircraft manufacturer, catering to the commercial, defense, and space sectors.
Insights from Airbus’ H1 Results
Airbus’ first-half performance was mainly impacted by a €989 million charge in its Space Systems business. As a result, adjusted EBIT for its Defence and Space segment dropped to negative €807 million from €78 million a year ago.
Additionally, in its Commercial Aircraft segment, the company increased investments to ramp up its jetliner production line while tackling supply chain challenges. Adjusted EBIT for Airbus’ commercial aircraft activities decreased to €1.95 billion from €2.26 billion in H1 2023.
For the full year, Airbus confirmed its outlook for 770 aircraft deliveries. Last month, the company reduced its FY24 forecast to 770 from its previous outlook of 800 deliveries. Airbus’ challenges reflect the broader issues in the aerospace industry such as supply chain disruptions and labor shortages.
Additionally, the company expects its adjusted EBIT to be around €5.5 billion in 2024.
Analysts Stay Bullish
Following the results, analyst Chloe Lemaire from Jefferies confirmed a Buy rating on Airbus stock, predicting a 20% upside. He stated that the company kept its guidance unchanged even with the charge in the Space sector, suggesting confidence in its business. Lemaire believes that the company’s resilience in a challenging environment supports his bullish stance.
Similarly, RBC Capital analyst Kenneth Herbert reiterated a Buy rating on AIR stock and expects 35% upside.
Is Airbus Stock a Good Buy?
Based on 14 recommendations, AIR stock has received a Moderate Buy rating on TipRanks. This includes 10 Buys, three Holds, and one Sell recommendation. The Airbus share price target is €159.60, which represents a potential favourable change of 20% in the share price.
