Last Update 07 Jan 26

Fair value Decreased 0.22%

AIR: Delivery Execution And New Orders Will Support Steady Future Cash Generation

Our Airbus fair value estimate edges slightly lower to €224.25, even as analysts lift price targets into a €205 to €240 range, based on better than expected Q3 results, solid margins, strong free cash flow, and reiterated guidance that now factors in tariff and headwind costs.

Analyst Commentary

Recent Street research on Airbus clusters around a higher valuation range, with several firms lifting price targets following the latest Q3 update, stronger than expected profitability metrics, and reaffirmed guidance that now explicitly includes tariff and headwind costs.

Bullish Takeaways

Bullish analysts are lifting price targets toward the upper end of the current range, with some moves up to €240. This indicates that they see room for upside relative to prior expectations.
Q3 revenue growth of 14% and adjusted EBIT margins of 10.9% are viewed as supportive for execution and profitability. This helps justify richer valuation multiples in their models.
Free cash flow running ahead of consensus is a key positive for these analysts, who see healthier cash generation as reinforcing balance sheet strength and flexibility.
Reiterated 2025 guidance that already factors in around €150m of tariff costs is seen as a sign of planning discipline. Bullish analysts argue that this reduces the risk of future estimate resets.

Bearish Takeaways

Bearish analysts are more cautious on upside after the recent move in expectations. At least one downgrade to Hold and a price target of €214 signal concern that a lot of good news may already be reflected in the share price.
Some research highlights the inclusion of a €100m to €200m headwind in the full year guide as a reminder that cost and macro pressures can still weigh on margins and execution.
While one major bank sees potential benefits if the 820 delivery target is met, more cautious voices view this target as an execution hurdle and prefer to wait for proof of sustained delivery momentum.
The spread in targets from around €205 to €240 suggests that bearish analysts see a less attractive risk reward skew, particularly if current margins or cash flow were to normalise from Q3 levels.

What's in the News

Airbus reportedly secured new aircraft orders from Chinese carriers Juneyao Airlines and Spring Airlines for a combined 55 A320 jets valued at about US$8b, split roughly equally between the two deals (Bloomberg).
The company is reported to be producing aircraft at a rapid pace in the final days of the year to work toward its revised annual delivery goal, with about 90 civil aircraft delivered so far in December and around 35 more expected, according to people familiar with the matter (Bloomberg).
Airbus reportedly exceeded its revised annual target of 790 aircraft deliveries, with preliminary figures indicating 793 aircraft delivered in 2025, subject to possible revision (Bloomberg).
Reports indicate Airbus is set to secure a large order from flydubai for around 100 A321neo jets, competing with Boeing for additional 737 MAX orders in the same campaign (Reuters).
Airbus opened a second A320neo family final assembly line in Tianjin, China. It is described as the company’s 10th global final assembly line and is expected to be fully operational in early 2026 (Reuters).

Valuation Changes

The fair value estimate has edged slightly lower from €224.75 to €224.25.
The discount rate has risen slightly from 6.15% to about 6.19%, implying a modestly higher required return in the model.
The revenue growth assumption has moved slightly higher from about 12.32% to about 12.37%.
The net profit margin assumption has eased slightly from about 8.36% to about 8.32%.
The future P/E multiple has risen marginally from about 24.95x to about 25.01x.

Rising global demand, sustainability focus, and airline fleet modernization drive strong aircraft sales, margin expansion, and long-term backlog growth.
Diversified growth in defense, space, and aftermarket services enhances earnings potential and operational efficiency through ongoing strategic investments.
Ongoing supply chain and supplier acquisition challenges, high inventories, and external risks threaten Airbus's production ramp-up, cost control, and future earnings stability.

Catalysts

About Airbus

Engages in the design, manufacture, and delivery of aeronautics and aerospace products, services, and solutions worldwide.What are the underlying business or industry changes driving this perspective?

Sustained growth in global air travel, particularly from emerging markets and rising middle-class populations, continues to drive robust order intake and long-term backlog growth for Airbus, supporting higher potential future revenues and operational leverage.
Airline fleet replacement cycles are accelerating due to increased prioritization of newer, fuel-efficient, and lower-emission aircraft; this supports higher demand for the A320neo family and other next-generation models, with positive implications for both revenue growth and margin expansion as product mix shifts.
Structural industry shift toward decarbonization and sustainability aligns with Airbus's portfolio and ongoing R&D investments, positioning the company to capture outsized share of new and replacement demand as environmental pressures mount, likely supporting higher net margins over time.
Expansion in the defense and space segments, underpinned by rising European defense budgets (e.g., post-NATO summit commitments), ongoing strategic transformation, and growing demand for UAVs and advanced military aircraft, enhances earnings growth potential and diversifies revenue streams.
Continued investments in automation, digitalization, and ramp-up of higher-margin aftermarket services businesses set the stage for cost efficiencies, improved recurring revenue, and higher overall net margins moving forward.

Airbus Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Airbus's revenue will grow by 12.1% annually over the next 3 years.
Analysts assume that profit margins will increase from 7.0% today to 8.0% in 3 years time.
Analysts expect earnings to reach €7.9 billion (and earnings per share of €10.17) by about September 2028, up from €4.9 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting €8.7 billion in earnings, and the most bearish expecting €6.1 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 23.8x on those 2028 earnings, down from 29.6x today. This future PE is lower than the current PE for the GB Aerospace & Defense industry at 32.9x.
Analysts expect the number of shares outstanding to grow by 0.1% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.17%, as per the Simply Wall St company report.

Airbus Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Persistent supply chain vulnerabilities-particularly with engine suppliers (CFM, Pratt & Whitney) and critical component providers like Spirit AeroSystems-have already resulted in significant delivery delays, production of gliders (completed aircraft missing engines), and elevated inventories. If unresolved or recurring, these issues could continue to constrain Airbus's ability to ramp up production, reducing revenue growth and pressuring free cash flow and margins.
Ongoing delays in closing critical supplier acquisitions, such as Spirit AeroSystems, due to regulatory and antitrust approvals, create risk around integrating key work packages and securing future production resilience; this uncertainty may disrupt operational planning, increase costs, and negatively affect overall earnings visibility.
Inventory levels and working capital requirements remain elevated and are expected to remain so until a fully stable rate of production is achieved-prolonged higher inventory ties up cash, exposes Airbus to additional holding costs, and introduces risk should market demand or supply chain conditions deteriorate, ultimately impacting free cash flow and net earnings.
The ramp-up to higher production rates (e.g., 75 A320s/month by 2027) is heavily dependent on engine manufacturers' capacity and reliability; any misalignment between Airbus's plans and its suppliers' ability to deliver-notably amid existing industrial and technical challenges in the engine sector-could threaten both revenue targets and margin improvement initiatives.
The broader macroeconomic and geopolitical environment, including the potential for renewed tariffs, strikes (e.g., U.K. wing factories), and continued stress on the aviation supply chain, introduces external risks that may disrupt operations, increase costs, and cause order or delivery delays, putting future earnings and cash flow at risk.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of €197.105 for Airbus based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €244.0, and the most bearish reporting a price target of just €140.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €98.7 billion, earnings will come to €7.9 billion, and it would be trading on a PE ratio of 23.8x, assuming you use a discount rate of 6.2%.
Given the current share price of €184.7, the analyst price target of €197.11 is 6.3% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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