JPM | Industrial Strength Morning Messages: Into earnings, Airbus u/g, Knorr-Bremse onto +ve Catalyst Watch

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JPM | Industrial Strength Morning Messages: Into earnings, Airbus u/g, Knorr-Bremse onto +ve Catalyst Watch

uidance for Airbus Commercial Aircraft Adj. EBIT, as well as an update on capital allocation. We

offer some thoughts on the potential guidance below. Reflecting our higher EPS estimates, we increase our multiples-based

Dec-27 PT by 7% to €240 (€225), implying 23% potential upside over the next 18 months.

• BASF: Chetan is off this week - but he would’ve been encouraged (given his UW rec) to see the reaction to BASF’s guidance

upgrade yesterday. It was supportive of his thesis that H2 will be a challenge for the diversified chemicals sector given that the

bulk of the upgrade to FY comes on the back of a better Q2 - and that the Company has not changed its FCF guidance for the

year.

• KNORR-BREMSE: Placing on Positive Catalyst Watch - good Q2 results and potential guidance upgrade- Akash Gupta

here We place Knorr-Bremse on positive catalyst watch for Q2 results on July 30 as we see a more favorable risk/reward into

the print vs. our original expectations (published on June 28). Compared to pre-Q2 Vara consensus we are now 3% ahead on

sales and 4% ahead on Adj EBIT estimates, suggesting no change to consensus vs. post Q1 update. While our order intake

expectations are in-line with consensus, the strong ACT June orders in North America (released post our original preview)

could bring upside to our Q2 CVS order intake. We forecast H1 Adj EBIT margin of 13.9%, and with stronger profitability in

H2, particularly in the North American truck market, we see potential for an upgrade to full year Adj EBIT margin guidance

of ~14%. With the results, Knorr-Bremse will also announce the new medium term targets, which we expect to be supportive