The aviation sector and its stocks are back in full recovery mode after being hit by the pandemic and lockdowns. German aviation players Deutsche Lufthansa (DE:LHA) and Airbus Group (DE:AIR) are experiencing the same ride. These companies have posted solid growth in their recent earnings and have gained analysts’ attention.
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Let’s have a look at the details.
Deutsche Lufthansa AG (Lufthansa)
Lufthansa is a leading airline in Europe with worldwide operations. It is also the flagship airline of Germany.
Along with the recovery in passenger numbers and operations, the share price has also regained momentum in the last year. The stock has gained close to 60% in the last six months. The company’s Q3 earnings and its solid performance in the first nine months of 2022 were the major driving factors.
For the first three quarters of 2022, the company posted a 118% growth in revenues of €23.9 billion. For the third quarter, this growth was 93% at €10 billion in revenues. Lufthansa was also able to turn around its net loss of €1.8 billion after the first three quarters of 2021 to a net profit of €484 million in 2022. The numbers were all the result of a huge increase in passengers and flights during the year.
Moving forward, the airline is targeting to expand its operations, especially covering the shorter routes in Europe. However, the recovery on the longer routes and the business class will be slower in the near term.
Will Lufthansa Stock Go Up?
Lufthansa’s stock has a Hold rating on TipRanks with an average target price of €8.23, which is 15% lower than the current level. Due to the tremendous growth in the share price in the last few months, the analyst doesn’t see much scope for growth. But the long-term prospects are bullish.
The stock has wide coverage from analysts, with a total of 15 recommendations. It includes five Buy, eight Hold, and two Sell ratings.
Analyst Yan Derocles from Oddo BHF recently published a report on European airlines with a bullish outlook. Post that he has upgraded his rating from Hold to Buy on Lufthansa stock. He said, “industry recovery has been confirmed,” which will boost the performance of airlines.
Airbus Group SE
Airbus Group is a manufacturing company that designs and delivers commercial aircraft and helicopters. It also caters to the defense and space sectors. The company is a worldwide leader in the aerospace industry.
Airbus Group, being the backbone of the aviation sector, witnessed growth in its performance with the recovery in travel and passenger numbers. For the first nine months of 2022, the company posted revenues of €38.1 billion, compared to €35.2 billion in the same period a year ago. During this period, Airbus delivered around 437 commercial aircraft. The company’s target is to deliver 700 aircraft for the full year 2022. It is on track, with around 565 deliveries as of November 2022.
Despite the ongoing challenges from the supply side and labor shortages, the company is confident about delivering its high order intake. The order backlog was 7,294 aircraft as of September 2022.
Another highlight of the company’s results was its cash flow. For the nine months, FCF was €2.9 billion, driven by profits and positive currency movements. Based on this, it has even raised its 2022 guidance for cash flow.
Are Airbus Shares a Good Buy?
According to TipRanks’ analyst consensus, Airbus stock has a Strong Buy rating, with a total of 14 ratings.
The stock has traded up by 16% in the last three months. The analysts predict another 20% upside on the current price level. The AIR target price is €143.33.
Conclusion
Both Lufthansa and Airbus have reported growth-oriented performance, and the companies are optimistic about the full-year numbers. This recovery has made analysts bullish on the overall aviation sector. Airbus has a Buy rating, while analysts have a Neutral take on Lufthansa.
