Dassault Aviation downgraded by Morgan Stanley

(AOF) – Morgan Stanley downgraded its recommendation from Overweight to Weight online on the Thales title, while raising its target price from 126 to 151 euros. The broker explains that the favorable outlook for the defense sector in the years to come is now fully reflected in the prices.


Key points

– Centennial aeronautical group with more than 2,100 civil aircraft and 1,000 military aircraft in service, delivered for 100 years in 90 countries;

– 88% export activity of €7.2 billion, covering upstream (design and development) and downstream (sales and support), from Mirage and Rafale combat aircraft to high-end Falcon business jets and military drones;

– Rise in defense power, at 68% of sales, ahead of the Falcons;

– “Architect of the future” business model based on the civil/defense and specific duality by distributing the profit in 3 equal parts – profit-sharing and profit-sharing for employees, dividends for shareholders and taxes for the State;

– Capital held 62.3% (76.9% of voting rights) by the Dassault family and 9.9% (6.1% of voting rights) by Airbus, Eric Trappier being Chairman and Chief Executive Officer of the Board Board of 9 members;

– Healthy balance sheet with available cash of €4.9 billion and €4.9 billion in equity.


– Innovation strategy integrated into the economic model: R&D self-financed at 7.6% of revenues and focused on the Falcon 6X, the Falcon 10 X, the Rafale F4 standard and the SCAF / InnoLab approach focused on the integration platforms of technological breakthroughs with 3 focuses – on-board artificial intelligence, decision-making via data and hydrogen / collaborations and partnerships via the “man machine learning” upstream study plan;

– Environmental strategy adhering to the recommendations of the European group ACARE and supported by the CleanSky project, carried out within the framework of the French CORAC and the European CleanSky and based on 3 pillars: deployment of life cycle analysis tools, technologies and concepts / processes , including eco-design, 80% waste recovery, and the Moliède program for innovative materials and limiting environmental impacts/reduction of CO2 emissions, after ISO 14001 certification of all industrial sites;

– Order book of €20.1 billion and order intake of €12.1 billion with 51 Falcons and 49 Rafales, including 37 for export at the end of 2021, since reinforced by orders for new Rafales by Greece and the United Arab Emirates.


– Sensitivity to the supply chain;

– Continued progress in the CUGE or Universal Electronic Warfare Capability -Falcon Archangel and Albatros for strategic intelligence, nEUROn stealth aircraft, etc.- and in the Eurodrone with Germany, Spain, France and Italy as 4 launch customers;

– Future of the SCAF program to create a Franco-German-Spanish combat aircraft, work on which has been interrupted for lack of an agreement with Airbus Defense & Space;

– Follow-up of the Falcon 6X, launched in 2021.

Consolidation phase in aeronautics

The size of French players is very limited compared to that of their American competitors. Hence the need to bring these stakeholders together, thus making it possible to increase the budget allocated to research and development and to gain weight in international calls for tenders. The Aéro Partenaires investment fund was launched in 2020 to support this movement. It was created by the investment company Ace Capital Partners, a subsidiary of Tikehau Capital, with the French State, Airbus, Safran, Dassault Aviation and Thales. This fund carried out several transactions in 2021.

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Dassault Aviation downgraded by Morgan Stanley

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