A Contrarian Call: Why One Analyst Sees Value in MTU Aero Engines After Its Slide

Kepler Cheuvreux upgrades MTU Aero Engines to 'Buy', citing a valuation gap after a share price correction. The new €365 target suggests 17% upside from current levels.

In a move that appears contradictory at first glance, the research firm Kepler Cheuvreux has upgraded its rating on MTU Aero Engines from "Hold" to "Buy." This recommendation comes alongside a reduction in the firm's price target for the stock, which was lowered from €408 to €365. The analysts provide a clear rationale for this seemingly mixed signal, framing it as a decisive opportunity for investors.

Valuation Gap Creates Entry Point

The central thesis from Kepler Cheuvreux is that the recent share price correction has overshot to the downside. According to their calculations, current market valuations would only be fundamentally justified if earnings estimates for 2030 were to be revised downward by a full 20%. The analysts deem such a severe downgrade unwarranted. Consequently, they view the stock's weakness as a buying chance. From yesterday's closing price of €313, the new €365 target implies an approximate upside potential of 17%.

This optimistic stance is supported by the company's solid operational performance. For the 2025 fiscal year, MTU reported adjusted revenue growth of 16%, reaching €8.7 billion. Its adjusted operating profit saw an even stronger increase of 29%, climbing to €1.4 billion. Looking ahead, management has provided 2026 revenue guidance in a range between €9.2 billion and €9.7 billion.

Technical Headwinds and Shareholder Returns

Despite the fundamental argument, the chart picture reveals ongoing pressure. The shares are trading roughly 14% below their 200-day moving average, positioning them well below medium-term trend lines. Since the start of the year, the stock has declined by nearly 16%.

For shareholders, the company has confirmed a dividend of €3.60 per share, scheduled for payment on May 12, 2026, with the ex-dividend date set for May 8. This payout, while modest, offers a tangible return as investors await a potential recovery.

The broader question is whether Kepler Cheuvreux's upgrade will trigger a wider market reassessment. The analysts note that the trajectory of demand in the civil aviation sector throughout the remainder of the year will be pivotal—a factor they consider decisive for their long-term 2030 forecast.