Melrose Industries PLC (LSE:MRO, OTC:MLSPF) has found a fan of sorts in US bank Morgan Stanley (NYSE:MS), which has started coverage with a 'hold' rating and a 500p price target.
In particular, Morgan Stanley (NYSE:MS) likes Melrose’s presence in the aircraft aftermarket which it says supports its view profits will be between estimates of 6-10% above consensus forecast by 2027.
Melrose has early exposure to the civil volume ramp-up as it delivers products 6-9 months ahead of aircraft completion.
“We estimate Melrose can capture a 10% global market share by 2030 in Repairs, fueled by 1,500 aircraft not being retired recently.”
Cash flow is also set to rise materially, adds the broker, but the timing is uncertain.
“We estimate 85% of the €5.7bn NPV target from RRSPs [revenue sharping partnerships] is already priced in."
Equal weight is the broker’s view. Shares eased 0.5% to 460.5p on Friday.