Avio Lifts Off, Reaching 12-month Highs
Equita and Intermonte raise target prices
ROME, June 26, 2019 /PRNewswire/ -- Avio's rockets have not altered the trajectory started in December on the Stock Market and Equita and Intermonte's analysts have revised upwards their respective target prices and confirm the "buy" assessment for the shares of the Italian aerospace leader that provides space access through its Vega and Ariane launchers. With a market cap which in June exceeded Euro 380 million, the share price of the company led by Giulio Ranzo climbed to the levels seen about one year ago of Euro 14.50, a point at which it began a descent to its minimum at the end of the first week of December of Euro 10.52, to then begin an ascent which continues to run.
Q1 results: revenues up 10% to Euro 82.6 million, EBITDA rises 15% to Euro 7 million
After a 35% revenue increase to Euro 439.7 million in 2018 and a net profit up 33% to Euro 24.3 million, the Avio Group in Q1 2019 delivered revenues of Euro 82.6 million, increasing 10% over Q1 2018, with EBITDA of Euro 7 million (+15%) and EBIT of Euro 3.1 million (+11%). The first quarter accounts approved by the Board of Directors in May indicated a net financial position of Euro 48.7 million as of May 31, substantially unchanged on December 31, 2018. "The strong results in the first quarter for all the main indicators once again confirm Avio's growth over recent years", stated Chief Executive Officer Giulio Ranzo, continuing "the good start in 2019, the steady progress in technology and applicational development, together with global small satellite market growth, enable us to continue to optimistically look to the future". In the first quarter, 1 successful Vega (VV14) launch took place, in addition to 1 successful Ariane 5 (VA247) launch. In parallel, the Critical Design Review of the new Vega C launcher was completed, which therefore entered the final test phase (test flight scheduled for the beginning of 2020). In addition, in the initial months of 2019, the second bench fire-test both of the P120 (first stage of the Ariane 6 and of the Vega C) and of the new Zefiro 40 motor (second stage of the Vega C) took place successfully in Sardinia. The propulsion stages for the new generation of launchers hence qualified as ready to flight. Finally, the assembly of the innovative Avio designed multi-payload SSMS (Small Spacecraft Mission Service) dispenser was completed. SSMS will fly on Vega in September 2019 and will enable the launch into orbit of over 40 satellites on a single mission.
The Equita and Intermonte analysts set target prices of Euro 16.80 and Euro 18.50.
Equita Sim. Following the strong results reported by the company, Equita analysts in their latest June report raised the target price from Euro 16 to Euro 16.80, confirming the "buy" recommendation. According to analysts "all Avio programs are proceeding as planned". In particular "the strong demand for new satellites to be launched into orbit provides excellent long-term visibility. The increasing number of launches (gradually increasing to 16 in 2023 from 9) ensures strong growth. The acceleration of production on the new motors (P120 for the new Vega C and Ariane 6 from 2020 and the upper stage M10 for the new Vega E from 2024) ensures operating margin growth. For these reasons - Equita states - we are raising our long-term expectations". In addition, the space sector is attracting massive amounts of funding and in particular, over the last 10 years, has attracted share investment of more than Euro 18 billion, of which 50% for the launchers sector. The "buy" recommendation is backed by the key role in the European launchers business (being the only supplier of all boosters for both current and future versions of Ariane and Vega), the improved global reliability of its launchers (i.e. failures over number of flights), market growth based on differing end-market applications (navigation, meteorology, earth observation) and replacement demand (the useful life of satellites is 2/7 or 10/15 years according to the orbit), the visible growth following a higher number of launches (from 9 to 16 in 2023) and new development projects funded by the ESA (European Space Agency).
Intermonte Sim. Avio's growth will continue over the medium/long-term according also to Intermonte's analysts, which in the Report published in June raised their target price from Euro 18 to 18.50, confirming the "buy" recommendation. "We reaffirm our positive outlook for the share - confirmed the analysts - as believing that the company is well positioned on a very promising market for small satellite launchers, which should continue to enjoy sustainable growth over the coming years, thanks to demand for increasingly precise, flexible and reliable launchers. A solid order portfolio which covers approx. 3 years of revenue guarantees good visibility for the coming years, a good sign in uncertain times. In addition, we appreciate the commitment of management to deliver the medium/long-term results, as the top managers are shareholders of the company through in orbit. Avio - finally - has a solid project for the development of new products and its space launchers are among the most reliable on the market."
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