AIR France KLM (0LN7 – Research Report), the Industrials sector company, was revisited by a Wall Street analyst today. Analyst Tabitha Foo from DBS maintained a Hold rating on the stock and has a €9.00 price target.
Tabitha Foo’s rating is based on a combination of factors that present a mixed outlook for Air France KLM. Despite the company surpassing expectations in the fourth quarter of 2024 with strong operating profit and revenue growth, there are concerns about its future performance. The optimistic guidance for 2025 hinges on maintaining resilient pricing and cost discipline, which could be challenged by rising taxes and potential consumer pushback on price increases.
Additionally, while Air France KLM is a dominant player in the European aviation market with strategic initiatives to improve efficiency and capture premium travel demand, its balance sheet strength is decent but not exceptional compared to peers. The company’s net-debt-to-EBITDA ratio has increased, and its free cash flow generation appears uninspiring due to significant capital expenditures. Furthermore, macroeconomic uncertainties, geopolitical tensions, and persistent cost inflation pose risks to discretionary travel spending and earnings stability, leading to a Hold recommendation.
Foo covers the Industrials sector, focusing on stocks such as Delta Air Lines, United Airlines Holdings, and Qantas Airways Limited. According to TipRanks, Foo has an average return of -0.3% and a 41.18% success rate on recommended stocks.
In another report released yesterday, Deutsche Bank also upgraded the stock to a Hold with a €8.50 price target.