SAF: Road show highlights near-term confidence, focus on workscope dynamics; maint Outperform, €370 PT

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SAF: Road show highlights near-term confidence, focus on workscope dynamics; maint Outperform, €370 PT

Safran

Target/Upside/Downside Scenarios Investment summary

We rate Safran (SAF-FR) Outperform with a €370 price target.Safran

We view Safran as a high-quality aerospace and defense

450 125 Weeks 29JAN24 - 19JUN26 supplier, with strong exposure in the narrowbody engine

400 market. Investors are primarily focused on the Aerospace

TARGETTARGET 370.00370.00 350 Propulsion segment, particularly with the CFM56 program, the

CURRENTCURRENT 329.40329.40

300 primary profit driver for the segment, and execution on the

250 LEAP, the next-generation narrowbody engine program.

150 We believe key positive catalysts for SAF-FR will come from

100 continued strength in the commercial aftermarket, execution

8m on LEAP, upside to the 2028 outlook, and capital allocation

6m

4m 2m optionality. We believe the valuation disconnect with US peers

2024 2025 2026

F M A M J J A S O N D J F M A M J J A S O N D J F M A M J provides upside potential.

SAF FP Rel. MSCI EUROPEAN INDEX MA 40 weeks

Source: Bloomberg and RBC Capital Markets estimates for Target Risks to rating and price target

Valuation The primary risks to our rating and price target are focused

in the company’s civil aerospace business. Specifically, weOur €370 price target is based on applying a 28x multiple to

highlight risks associated with passenger and cargo travelour 2028 FCF/share estimate of €13.23. We believe a multiple

levels, airline maintenance spending schedules and MROat the high end of historical ranges is appropriate considering

capacity and lead times, as well as work scopes and thethe outlook for margin and FCF upside, catalysts associated

availability of spare parts and material lead times.