Safran: Raising PT to EUR 430 on higher EPS estimates

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Safran: Raising PT to EUR 430 on higher EPS estimates

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“structural tailwind” for its aftermarket sales in 2027 and 2028. This was one

Sam Edmunds - Specialist Sales -

of the most bullish comments we have heard from SAF mgmt in recent years. European Industrials

Our only note of caution would be that SAF’s comment referred only to the (44-20) 7742-8733

supply side of the industry. On the demand side, we still worry that the high sam.edmunds@jpmorgan.com

price of jet fuel, if sustained, could impact air travel / airline profitability / Key Changes (FYE Dec)

aftermarket demand. In our recent meetings with multiple civil aero Prev Cur Δ

companies, mgmt teams have been remarkably optimistic that the current Adj. EPS - 27E (€) 12.48 13.24 6.0%

geopolitical instability will have little impact on their businesses.

Style Exposure

• FCF better than expected (again): SAF increased its FY26 FCF guidance to

€4.7-4.9bn from previous guidance of €4.4-4.6bn. In the last several years SAF

has consistently beaten its initial FCF guidance. This has been due to better

profit, better-than-expected deposits on defence exports, and better-than-

expected payments on long-term service agreements. We assume that its cash

conversion ratio will mean revert in 2027 and 2028 (medium-term guidance is

c70% of Adj. EBIT) but this may prove to be conservative.

• Share buyback going faster than expected: SAF is currently undertaking a

SBB of €5bn over four years, so we had assumed it would proceed at a pace of

€1.25bn pa. In H1 26 SAF spent €913m buying back shares. This may have

been opportunistic given that the share price dropped in the early phase of the

war with Iran. However, given its strong FCF, we also suspect that SAF will

continue to proceed at a faster pace than expected.