Catalyst ahead: We believe EADS (€15.05) offers investors a combination of attractive valuation, catalyst of a successful A400M conclusion, the upgrade from lower production cuts and the USD rally. In the last six months, EADS has lagged both its
European civil aerospace peers (by ~15%) and Boeing (by ~30%) due to concerns over a weak USD, the impact of airline difficulties and the overhang of A400M. However, as we head towards FY09 results (March 9) we believe the stock is likely to benefit from the lifting of these overhangs and specifically i) the upgrade from lower-than-expected production cuts; ii) the 10% appreciation of the USD versus the euro in the last three months; and iii) a successful conclusion to A400M. We reiterate our Overweight rating and €19 price target.
Buy Upside Ahead of Catalyst
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