Aerospace & Defence: 'Near-term turbulence but clearer skies ahead' - Berenberg

Montana Aerospace AG

15/06/2022 10:00

** Global air traffic recovery is proving resilient despite
multiple COVID-19 and macroeconomic headwinds, Berenberg says,
expecting "near-term turbulence but clearer skies ahead"
    ** The brokerage sees supply chain bottlenecks as the key
near-term risk to aircraft production ramp-up plans, and points
out that inflationary pressures and operational headwinds are
likely to persist until end-2023
    ** However, as headwinds ease, it expects the industry to be
able to achieve higher production rates in 2024/2025, something
that valuations fail to reflect
    ** Berenberg prefers names with higher narrow-body aircraft
exposure, citing higher level of conviction in its recovery 
    ** Based on the above, the broker upgrades MTU Aero Engines
 MTXGn.DE  to "buy" from "hold" and downgrades Rolls-Royce
 RR.L  to "hold" from "buy"
    ** It sees MTU Aero Engines offering an attractive entry
point after the 22% share slump over the past three months,
while visibility and pace of the recovery remains less certain
for Rolls-Royce
    ** The broker names Airbus  AIR.PA , Safran, Montana
Aerospace  AERO.S  as its top picks, all three "buy"-rated
    ** It maintains "hold" rating on FACC  FACC.VI  and Senior
 SNR.L 

 (Reporting by Marta Frackowiak)
 ((marta.frackowiak@thomsonreuters.com))