On Thursday, Bernstein downgraded its opinion on Safran shares from 'Outperform' to 'Performing in line with the market', although its target price was raised from €174 to €180.
In a research note, the analyst explains that, after a combination of positive factors in 2023, which enabled the stock to climb by 36% compared with +13% for the STOXX 600 index, the outlook for 2024 is much more uncertain.
We consider the stock to be correctly valued today in view of the more difficult environment that is shaping up for 2024, with probably fewer pleasant surprises in store, not to mention the unknown factor of the investor day scheduled for the end of the year", he stresses.
While the intermediary considers that at 13 times its Ebitda, a level at the top end of its historical range, the stock is not richly valued in itself, it is not very attractive in view of the probable absence of good news this year.
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Safran is a high technology international group, a leading equipment provider in the Aerospace and Defense markets. The group specializes in the design, manufacturing, and marketing of equipment and systems of high technology mechanical and electronic equipment. Net sales break down by product family as follows:
- aeronautic and space propulsion systems (51.2%): helicopter motors (No. 1 worldwide), civil and military airplanes motors, systems for space lancers and missiles, turboreactors for drone targets, etc.;
- aircraft equipment, defense systems and aerosystems (38%): airplane engine pods, landing gear, braking systems, electric wiring systems, etc. Safran also offers on board aircraft systems and equipment (primarily evacuation slides, emergency arresting systems, protective parachutes and oxygen systems, electrical power management systems, control systems, water and waste management systems and connectivity systems) and defense and security systems (helicopter flight controls, fingerprint-based biometric identification systems (No. 1 worldwide), inertial systems, optronic systems, tactical drone systems, etc.);
- aircraft interiors (10.7%): cabin interiors and seats;
- other (0.1%).
Net sales are distributed geographically as follows: France (19.4%), Europe (24%), the Americas (34.8%), Asia and Oceania (13.2%), Africa and the Middle East (8.6%).