European plane manufacturer Airbus Group SE has won a contract to deliver 38 new Eurofighter aircraft to the German Air Force.
Airbus (EADSF) said the contract makes Germany the largest ordering nation in Europe’s biggest defence program. The order includes the delivery of 30 single-seater and 8 twin-seater Eurofighters. Three of the aircraft will be equipped with additional test installations to support the continued development of the Eurofighter program.
Eurofighter is Europe’s largest defence programme, in which the UK, Spain and Italy are involved alongside Germany. In addition to technological innovation and contracts, it secures more than 100,000 jobs in Europe.
“The new Tranche 4 Eurofighter is currently the most modern European-built combat aircraft with a service life well beyond 2060,” said Dirk Hoke, CEO of Airbus Defence and Space. “Its technical capabilities will allow full integration into the European Future Combat Air System FCAS”.
The renewed order from Germany secures production until 2030 and comes at a strategically important time for the program, Airbus added. The plane manufacturer said it expects a Eurofighter order from Spain to replace its legacy F-18s, while procurement decisions in Switzerland and Finland are imminent in 2021.
Shares in Airbus have lost more than 31% of their value this year as airline travel has fallen off a cliff due to lockdown restrictions forcing many airlines around the world to ground the majority of their fleets and to sharply reduce spending. This has resulted in a deep cut in the number of commercial jets planemakers’ customers need over the next few years with some asking for delivery delays or order cancellations.
However, the stock has jumped almost 30% over the past month amid optimism for the success of an effective Covid-19 vaccine and in the runup to Joe Biden winning the US election. Looking ahead, it looks like Wall Street analysts are not swayed of a recovery in the shares over the coming year, with the average price target set at $90.56, which translates into 10% downside potential to current levels.
In a more pessimistic outlook, JP Morgan analyst David Perry recently reiterated the stock’s Sell rating with a $54.99 price target (45% downside potential). The analyst sees a “significantly deteriorating” outlook for global air traffic and airline profits in 2021.
The rest of the Street has a cautiously optimistic stance on the stock. Out of 14 recent analyst reviews, 8 have Buy ratings, 3 have Hold ratings, and 3 have Sell ratings, which add up to a Moderate Buy consensus. (See Airbus stock analysis on TipRanks).
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