Market Overview

Bernstein Upgrades Airbus To Outperform, Joins Boeing As Bull Plays In Portfolio

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Bernstein Upgrades Airbus To Outperform, Joins Boeing As Bull Plays In Portfolio

On Monday, AB Bernstein issued a company note on Airbus Group SE (EPA: AIR) as analysts believe that aircraft demand will remain strong. Bernstein upgraded Airbus from Market-Perform to Outperform with a 78 euro price target.

Douglas Harned and Christian Laughlin, analysts at Bernstein, wrote, "We view the outlook for commercial aircraft demand as sound, at a time when commercial aerospace stocks are depressed due to macroeconomic fears. Although we have long been positive on the demand outlook for Airbus, we have been concerned about risks associated with A350 development and production increases – concerns that have now dissipated."

With this upgrade, Airbus joins Boeing Co (NYSE: BA) as a bull play in a Bernstein air-transportation-based portfolio.

Boeing is currently rated at Outperform with a price target of $180.

Related Link: United Technologies CEO: Honeywell Combo Would Be Blocked, Destructive To Shareholder Value

Justification

Analysts at Bernstein gave two key reasons why they see strength in Airbus.

1. Demand For Planes
Analysts at Bernstein revised their outlook for the A350 program, citing corporate demand along with strong margins and smooth production. Bernstein expects deliveries to triple in 2016 to 52 units.

2. Valuation
Bernstein wrote that Airbus is currently discounted in regards to key competitors and believes that the company's multiple could grow as their airplane models continue to be delivered and earnings are announced. While global economic concerns are still present, Bernstein believes that Airbus can still outperform their competition.

At the time of this publication, Airbus was seen trading at $59.78, up 3.95 percent.

Image Credit: Public Domain

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