Dassault Aviation: More Risk, More Upside On European Defense Recapitalization

2025-04-22 01:45:48 ET

Summary

• I maintain my buy rating for Dassault Aviation with a $376.89 price target, reflecting a 9% upside potential, despite the stock trading above its median EV/EBITDA multiple.
• Dassault Aviation's business revolves around Rafale fighter jets and Falcon business jets, with strong growth in defense exports and a robust order backlog.
• The company's 2024 earnings showed significant growth, with a 32% increase in order intake and a 50% rise in operating income, although net income growth was modest.
• While Dassault Aviation has closed the valuation gap with peers, future upside depends on consistent earnings growth, making the investment slightly riskier.

In November 2024, I reiterated my buy rating for Dassault Aviation ( DUAVF ) with a $214.50 price target for FY24 and $277 when valuing the stock one-year ahead of earnings. The stock is now trading at $351 driven by the significant increase in stock prices of European aerospace and defense companies....

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