European Industrials: Feedback from US meetings

Research evidence excerpt

European Industrials: Feedback from US meetings

the sub-sector to see meaningful interest, given its exposure to an automation Tore Fangmann >> Research Analyst

recovery (confirmed by Q2 DI org orders +12%). Short-cycle interest was also subdued Merrill Lynch (DIFC)

due to cautious views on EU macro, with the exception of Atlas Copco where investors +971tore.fangmann@bofa.com4 425 8210

sought to understand if weakness post-Q1 is a buying opportunity (in line with our view). Lorenzo Di Patrizi >>

Research Analyst

Aero: focus on Airbus rather than aftermarket names MLI+44 (UK)20 7995 7626

Airbus received significant interest, with investors highlighting an attractive combination lorenzo.dipatrizi@bofa.com

of accelerating deliveries (catching up to first flights), excitement into the July investor

update (potential mid-term Commercial profit target), and inexpensive valuation (in line

AIR = Airbuswith our view). Investors were however concerned about the July update itself if mgmt

decide not to give a profit target (e.g. if Iran conflict unresolved). Aero aftermarket ATCOA = Atlas Copco

received much more limited interest which reflects an (unusual) lack of conviction about

geopolitical developments and hence how global flight hours will evolve going forward. DI = Digital Industries

Defence: Rheinmetall shares seen reaching attractive level ENR = Siemens Energy

Investors in NYC had been cautious on EU Defence for the past 6 months, but we sensed HFs = hedge funds

this changing after recent underperformance – with a particular focus on Rheinmetall.

Most questions focussed on understanding the move down (in our view mainly driven by LR = Legrand

slower-than-expected orders) and where there could be a val’n floor (likely close, given PRY = Prysmian