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Airbus Shares Surge 7% on €5 Billion Buyback and New 2029 Profit Target
Summary
The European aerospace giant announced a new three-year share repurchase program and set a long-term adjusted EBIT target of up to €13 billion, boosting investor confidence and sending its stock higher.
Shares in Airbus SE (AIR) jumped 7% on Wednesday after the European aerospace group announced a €5 billion share buyback program and set an ambitious new long-term profitability target.
Strategic Update Details
During a Business Update for investors and analysts in London, Airbus management outlined its financial outlook, including a new target for adjusted earnings before interest and taxes (EBIT) of €12 billion to €13 billion by 2029. The company specified this forecast assumes a euro/dollar exchange rate of 1.22.
The company's Board of Directors approved the three-year share repurchase program, which remains subject to shareholder approval. Airbus also reiterated its cash conversion target of approximately 1 over a five-year period and confirmed that its guidance for 2026 remains unchanged.
"As we ramp up across all our businesses, working to meet strong demand for our portfolio of innovative civil and military solutions, our priorities are clear," said CEO Guillaume Faury in a statement. "Our trajectory fuels our profitable growth, creating value for our customers, employees, partners and shareholders."
Market Reaction and Analyst View
AdAnalysts at Morgan Stanley, who rate Airbus shares as "overweight" with a €227 price target, described the update as "more bullish than expected." In a research note, the bank called the share buyback "the biggest surprise," estimating it represents about 1% of the company's market capitalization per year.
Key takeaways from the bank's analysis include:
- Airbus is expected to return a total of 60% of its cumulative free cash flow to shareholders over the next three years, including dividends.
- The bank noted a subtle change in A320 production guidance, with the presentation specifying a rate of 70 to 75 per month in 2027, omitting a previously communicated target of 75 per month thereafter.
Outlook and Assumptions
The company's forward-looking statements assume no additional disruptions to the world economy, air traffic, or its supply chain. Airbus noted that its outlook is based on the current baseline for trade regulations and tariffs and does not account for the potential impact of future mergers or acquisitions.
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