(News Bulletin 247) – Stifel renews its purchase opinion as well as its price target of 240 euros on the aircraft manufacturer’s stock, judging it to be defensive, literally and figuratively.

For its first communication of the year on January 12, Dassault Aviation had clearly missed its meeting with the market. The designer of the Rafale and the Falcon family of business jets had in fact announced deliveries of Rafale and Falcon lower than its objectives for the whole of 2023. Above all, order intake in jets business had clearly disappointed the market and analysts.

On the Paris Stock Exchange, Dassault Aviation was logically sanctioned, with a stock which fell by 6.4% on the Monday following this announcement. The stock then suffered its biggest drop since the session of July 21, 2023, (-8.53%), again in reaction to a disappointing publication showing signs of weakness in the activity of Dassault Aviation.

In a note published this Monday, Stifel returns to the latest figures published by Dassault Aviation. Remember that Dassault Aviation only delivered 26 Falcons in 2023, nine fewer than the 35 targeted by the group, after 32 in 2022.

“The biggest disappointment concerns Falcon orders, which fell by more than 50% in the second half,” recalls the financial intermediary. “The business jet market has certainly been affected by the economic climate, but the launch of the Falcon 6X, the group’s latest model, should have stimulated sales,” he continues. For Stifel, however, it is still “too early” to conclude that it is a commercial failure.

“The decision to purchase a business jet takes time, and customers will need to see the aircraft in flight before purchasing it,” adds the design office.

Concerning the Rafale, Dassault Aviation’s iconic combat aircraft, the commercial trend is much more encouraging, with 60 orders over 2023, to which are added the announcements of finalization of tranches on the Indonesian side (18 units) and France (42), this month of January.

“Excellent” prospects for the Rafale

Certainly, commercial activity and disappointing deliveries from Dassault Aviation led Stifel to lower its earnings estimates for the past year. However, several elements support Stifel’s confidence in Dassault Aviation.

For 2024, Stifel expects 44 new Rafale orders, with 18 already signed in Indonesia and 26 in India, while growing international tensions should continue to stimulate military spending. In this context, the financial intermediary estimates that Qatar could order 24 Rafale, and, despite the authorization to again sell Eurofighters (the fighter plane of Airbus, BAE Systems) to Saudi Arabia, it does not It is not excluded, according to Stifel, that the latter country falls into the hands of Dassault Aviation.

“On the industrial level, despite the delays, the ramp-up of production is still taking place according to the planned schedule,” specifies Stifel.

Concerning the Falcon 6X, the financial intermediary continues to believe that this model, given its “exceptional characteristics”, will allow the group to rebound in the business aviation segment.

Stifel also recalls that the military division and the Rafale represent more than 80% of Dassault Aviation’s order book. This order book continues to grow and is now approaching 8 years of turnover.

In light of the points raised by Stifel, the financial intermediary renews its purchase recommendation this Monday as well as its price target of 240 euros. He considers the Dassault Aviation stock to be “defensive, literally and figuratively” and that it is “still largely undervalued.

On the Paris Stock Exchange, Dassault Aviation shares reacted modestly to this analyst note and rose 0.5% to 171.80 euros around 1:10 p.m.

Remember that Dassault Aviation will publish its financial results on March 6.