On Friday, CFRA maintained its Hold rating on Safran SA (EPA:SAF:FP) (OTC: SAFRF), while increasing the price target from EUR184.00 to EUR220.00. The new stock target is based on a price-to-earnings (P/E) multiple of 32 times the anticipated 2025 earnings per share (EPS), reflecting a valuation at a premium of one standard deviation above the company's five-year average.
Safran reported a robust first quarter for 2024, with an 18% year-over-year increase in revenue, or a 19% organic growth. This performance was bolstered by significant improvements across all business segments, with the Equipment & Defense division standing out with a 24% growth in revenue compared to the previous year.
In light of these results, CFRA has adjusted its earnings projections for Safran. The firm now expects the company's 2024 EPS to be EUR6.25, up from the previous estimate of EUR5.75. Similarly, the 2025 EPS forecast has been increased to EUR6.87 from EUR6.34.
Despite the positive earnings outlook, CFRA believes that the market has already factored in these prospects, as indicated by Safran's share price, which has risen by 46% over the past year.
Safran has confirmed its financial targets for 2024, aiming to reach approximately EUR27.4 billion in adjusted revenue and EUR4.0 billion in recurring operating income.
The company's continued recovery in the aviation industry is a key factor contributing to its financial performance and the raised price target. Still, with the current valuation already at a 0.9 standard deviation premium, CFRA's stance remains cautious with a Hold recommendation.
InvestingPro Insights
As Safran (OTC: SAFRF) continues to navigate the aerospace and defense market with strength, real-time metrics from InvestingPro offer a deeper look into the company's financial health. Safran's market capitalization stands at a robust $92.06 billion, and the company exhibits a P/E ratio of 25.23, which adjusts to 22.46 when considering the last twelve months as of Q4 2023. This P/E ratio is particularly noteworthy as it trades at a low point relative to near-term earnings growth, suggesting potential value for investors.
InvestingPro Tips highlight that Safran holds more cash than debt, a sign of financial stability, and has a history of rewarding investors, raising its dividend for 4 consecutive years. Moreover, with a strong return over the last three months, up 17.03%, and a significant six-month price total return of 41.56%, the company's stock performance reflects its robust market presence and profitability over the last twelve months.
These factors contribute to the positive sentiment around Safran's stock, even as it trades near its 52-week high, with a price 95.46% of that peak.
For investors seeking further insights and a comprehensive list of tips, including the ability to see how cash flows can sufficiently cover interest payments and the company's performance against industry peers, InvestingPro offers additional guidance. There are 12 more InvestingPro Tips available for Safran, which can be accessed at https://www.investing.com/pro/SAFRF. For those interested in subscribing, remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.