Airbus price target raised at Jefferies, Rolls-Royce remains first choice according to Investing.com

Investing.com — Analysts at Jefferies revised their estimates within the aerospace and defense sector, with particular emphasis on Airbus and Rolls-Royce (OTC:)

The brokerage raised its target price for Airbus to 190 euros from 170 euros, reflecting a 12% increase.

Despite the updates, Rolls-Royce remains the best investment choice in the sector. The target price for Rolls-Royce has been significantly increased by 23% to 800p from 650p.

Airbus’ improved outlook reflects favorable currency exchange rates and strong commercial aircraft sales.

Analysts forecast a strong fourth quarter, driven by a favorable combination of delivery and inventory management.

This could increase free cash flow and increase share buybacks. While increasing original equipment production presents challenges, adjusted EBIT is forecast to reach around €7 billion, assuming deliveries of 810-820 aircraft

Rolls-Royce showed positive momentum, boosted by currency exchange rates and improving market sentiment.

Analysts expect the company to exceed guidance for the fiscal year. The currency headwind is estimated to contribute £200m to EBIT by 2027.

This positive outlook is further supported by the possibility of outperforming market expectations in the upcoming trading updates.

Jefferies also provided a broader assessment of the sector, noting potential volatility in the defense segment due to geopolitical uncertainties, while highlighting continental Europe’s likely benefits from increased defense spending commitments.

The brokerage remains cautious on UK and US defense names, given ongoing reviews and budget uncertainties.