Airbus & Boeing Production vs. Deliveries Tracker

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Airbus & Boeing Production vs. Deliveries Tracker

Airbus & Boeing Production vs. Deliveries Tracker Equity Research

Investment Thesis, Valuation and Risks

Airbus SE (AIR-FR)

Investment Thesis

While we ultimately see upside on an increasing proportion of higher-priced and higher-margin A321 deliveries, leverage to higher A350

volumes (on improving supply chain), and the opportunity for improved A220 returns, Airbus is more constrained by supply chain than BA

and we expect a larger negative impact from SPR integration. We rate the shares Equal Weight.

Target Price Valuation for AIR-FR

• Our price target of €175 reflects Airbus trading at an 18x FCF multiple, a ~25% discount to where we expect aero to trade on average,

as compared to its current ~20% discount. Aero has historically traded at ~20x FCF on average while we expect the group to trade at

premium as earnings outgrow over the next several years.

Risks to Our Price Target and Rating for AIR-FR

Upside risks

• Margins could improve faster than expected as deliveries ramp

• Strengthening in USD

• Integration of SPR A220 and A350 production could be smoother than expected

Downside risks

• Typical seasonality requires Q4 ramp

• Integration of SPR A220 and A350 production could be a challenge

• Further weakening in USD

The Boeing Company (BA)

We rate the shares Overweight, as we see upside to FCF expectations on MAX and 787 production, reversal in 777X drag, and working

capital opportunity as inventory and advances return to normal.

Target Price Valuation for BA

Our $250 price target reflects BA trading at a 20x FCF multiple, a ~15% discount to where we expect aero to trade on average, as

compared to its current ~30% discount. Aero has historically traded at ~20x FCF on average while we expect the group to trade at