On Monday, Deutsche Bank (ETR:DBKGn) maintained a Hold rating on Dassault Aviation SA (Euronext:AM) (OTC: DUAVF) stock while increasing the price target to EUR222 from EUR199. The adjustment reflects the analyst's perspective on the current challenges and opportunities faced by the company.
Despite some part shortages, particularly in Aerostructures, which are delaying the timely delivery of business jets, Dassault Aviation is actively seeking alternative solutions to enhance part supply.
However, the analyst anticipates that these supply issues will persist through 2024, leading to a more conservative stance on aircraft delivery targets.
The analyst noted that Dassault Aviation could not resort to double sourcing to mitigate the part shortages but is investigating other methods to improve the situation.
These supply chain difficulties are significant enough to influence the company's delivery schedules, prompting a cautious forecast for the near future.
In terms of opportunities, the analyst highlighted several potential Rafale fighter jet contracts. Prospective deals include initial orders from Serbia or Saudi Arabia, an additional purchase of 10 new aircraft by Greece, and a follow-up order that may come from Egypt.
The analyst also pointed out that India represents one of the largest opportunities for Dassault Aviation, with an unbooked order of 26 Rafale M jets and the possibility of a contract for 114 more aircraft for the Indian Air Force.
The ongoing commitment of France to upgrade the Rafale to the F4 and F5 standards was cited as a key factor in ensuring the aircraft's long-term relevance and appeal as a defense asset. This commitment is expected to keep the Rafale competitive and attractive for international buyers for many years to come.
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