By Simon Constable

Shares of European aircraft and military manufacturer Airbus could be set to take off following recent turbulence. The company is outpacing its main rival, U.S.-based Boeing, which has suffered from two 737 MAX crashes, a plane door falling off, and a major strike, not to say stranding two astronauts in orbit after Boeing Starliner problems. Airbus should also benefit as Europe builds up military capabilities.

"As a long-term holding, Airbus is a good name," says Nick Owens, an equity analyst at Morningstar. He thinks the fair value of the stock is priced at 165 euros ($188), or 19% higher than the recent EUR139. "Airbus has a strong franchise and long-term viability," he says.

Some financial pros see the stock price going even higher. The average analyst forecast is EUR185, with the highest at EUR233 and the lowest at EUR140, according to data from MarketScreener.

Investors comfortable with taking on risk should consider buying the company's stock (ticker: AIR) or its American depositary receipts $(EADSY)$.

The stock has fallen about 10% year to date, largely due to the imposition of broad tariffs on U.S. imports. The stock is relatively cheap, with a recent forward price/earnings ratio of 20, compared with its average forward P/E of 23 over the past five years. It has a 1.5% dividend.

Boeing long dominated the market for commercial passenger planes. But that has changed dramatically. Last year, Airbus shipped 761 commercial planes while Boeing produced 333, according to a report from aviation analytics provider Cirium.

China and the rest of the Asia-Pacific, including India, are key airplane growth markets, says Brian Glenn, chief investment officer at Premier Path Wealth Partners. "Both have had such a strong middle-class growth in the last 10 to 20 years," he says. Markets such as Europe and the U.S. are mature, meaning that sales largely involve replacement planes.

In 2024 Boeing looked as if it was making a comeback, with deliveries of its 737 MAX plane to China after an almost five-year hiatus, according to a Cirium report. However, the good news was quickly upended when President Donald Trump imposed tariffs as high as 245% on Chinese goods. Cirium recently confirmed that three of five airplanes are being sent back to the U.S. from China."China doesn't want to buy Boeing," says Jay Van Sciver, head of industrials at Hedgeye Risk Management.

Meanwhile, Airbus already dominates sales to India and the non-Chinese Asia-Pacific.

The big issue for Airbus is that new U.S. tariffs could disrupt global supply chains aerospace companies reply on. "In the current environment, it is really hard to know how the industry is going to grow in the face of tariffs," says Van Sciver. He notes that aerospace supply chains are exceptionally complex, and it isn't clear which countries will retaliate against the U.S. Airbus has more than 18,000 suppliers across the globe, which dramatically raises the probability of supply-chain disruptions.

On the plus side, Airbus looks likely to benefit from increased European Union military spending, according to a recent report from the United Kingdom's Hargreaves Lansdown: "The Defence and Space division offers some diversification and has the potential to be a great asset for the company in the current elevated threat environment."

In 2024 Airbus' defense and space division accounted for 18% of Airbus revenue. But that could easily grow with more EU defense spending. A Goldman Sachs report says spending could grow from 1.8% of gross domestic product in 2024 to 2.4% in 2027, raising defense spending by EUR80 billion over time.

Despite tariff uncertainties, Airbus looks like a good long-term bet for investors.

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April 25, 2025 02:30 ET (06:30 GMT)

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