According To Bank Of America, This Global Stock Has A 60% Upside Potential

There is no doubt that Airbus is a structural winner in the second quarter of 2023 as indicated in the list of the 10 best ideas released by Bank of America for the second quarter of 2023.

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A number of reasons have led the bank to recommend the company, including increased demand for large planes, an improved supply of airplane parts, and the fact that China is finally reopening its markets after the pandemic.

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Based on this assumption, according to a report by BofA analysts, Airbus' shares are expected to rise by 60% over the next 12 months to reach 200 euros ($217) per share. At midday on Monday, the shares of the Paris-listed aerospace company traded at 125 euros per share.

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According to analysts, Airbus's recent announcement of growth targets ahead of the Paris air show later this year - a catalyst event that will have a significant impact on the stock's performance - has given them a greater level of confidence in its ability to meet the targets.

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As announced by the organization in late 2022, Airbus is planning to produce 65 single-aisle aircraft a month from 2023 to 2024. If there are no additional issues in the global supply chain between now and the middle of the decade, it could ramp up to 75 aircraft a month.

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According to Guillaume Faury, Airbus' CEO, earlier this month, global supply chains proved to be a challenge in 2022, delaying the company's growth plans and causing the company to experience setbacks.

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It has been a very difficult year in terms of supply chains around the world. 2022 has been particularly challenging from that perspective, Faury told Trade Algo. "We are moving forward, but very slowly, in that direction."

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According to the BofA analysts, Airbus' increased production rates are being supported by suppliers such as Rolls-Royce and General Electric who are also working to keep up with the aircraft's pace.

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This is also good news for Airbus as it suggests there is also a growing demand for widebody airplanes, also known as widebody aircraft.

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In a note sent to clients on April 3, the analysts led by Benjamin Heelan said in a note that "with the recovery in full swing, we may see further announcements of widebody and narrowbody orders at the show".

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Furthermore, BofA said that Boeing, Airbus's main competitor, has not announced plans to introduce new planes within the next decade, which is good news for the company. Airbus should benefit from the reduced competition in the next five years by increasing free cash flow and providing higher shareholder returns.

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