Last Update 08 Jan 26

Fair value Increased 3.63%

LHA: Turnaround Uncertainty And Execution Risks Will Constrain Share Recovery Potential

Analysts have increased the fair value estimate for Deutsche Lufthansa to about €8.30 from €8.01, citing improved profit margin assumptions, a slightly lower discount rate and recent upward revisions to price targets, including a move to €9.30 at one major firm and €8 at another.

Analyst Commentary

Recent research opinions on Deutsche Lufthansa have shifted meaningfully over the past few months, with some firms turning more constructive and others taking a more cautious stance. Together, these moves help frame how the market is thinking about execution risk, profit recovery and valuation at current levels.

Bullish Takeaways

Bullish analysts highlight the turnaround program as a key driver for improved profitability, with one calling out the potential for strong EBITDA growth through 2027, which supports higher fair value assumptions.
The double upgrade from Underweight to Overweight, alongside a price target move to €9.30 from €5.40, signals a material shift in how some see the risk and reward trade off, particularly around earnings recovery.
Recent upward revisions to price targets, including moves toward the €8 to €9 range, indicate that bullish analysts see the current share price as not fully reflecting potential margin improvement if management executes on its plan.
The progression of targets from around €5.30 to €8 and €9.30 gives investors a reference range for where optimistic research views Lufthansa’s medium term earnings power.

Bearish Takeaways

Bearish analysts point to ongoing headwinds following a weak 2024, which in their view still justify more cautious ratings such as Underweight or Neutral even when price targets move higher.
The downgrade to Neutral from Buy, with a target cut to €7.30 from €8.50, underlines concerns that a portion of the recovery story may already be reflected in the stock, limiting upside if execution is uneven.
Price targets in the €5 to €7 range, especially when paired with Underweight or Neutral ratings, show that some analysts see better risk adjusted opportunities elsewhere or remain unconvinced about the pace of margin improvement.
The mix of upgrades and downgrades within a short period reinforces that there is still meaningful disagreement about Lufthansa’s ability to translate its turnaround program into sustained earnings growth.

What's in the News

Morgan Stanley initiated coverage of Deutsche Lufthansa with an Underweight rating and a €5.40 price target, highlighting continued headwinds following a weak 2024 as a key consideration (Periodicals, Morgan Stanley).
Turkish Airlines publicly denied media reports that it is negotiating to acquire all shares in SunExpress, the leisure carrier it owns jointly with Deutsche Lufthansa, and stated that SunExpress continues to operate under the existing joint partnership structure (Key Developments).
Separate media reports indicated that Turkish Airlines is seeking to acquire Deutsche Lufthansa's 50% stake in SunExpress, while Deutsche Lufthansa is described as resisting. There has been no official comment from the German carrier and no formal response from Turkish Airlines at the time of publication (Key Developments).

Valuation Changes

The fair value estimate has risen slightly to about €8.30 from about €8.01, reflecting modestly updated assumptions.
The discount rate has edged down slightly to about 8.65% from about 8.71%, implying a small change in the required return used in the model.
The revenue growth assumption is essentially unchanged at about 3.92% compared with about 3.95% previously.
The profit margin assumption has risen meaningfully to about 4.73% from about 4.10%, pointing to higher expected profitability in the model.
The future P/E has been reduced to about 6.10x from about 6.80x, indicating a lower multiple applied to projected earnings.

Elevated expectations for revenue and margin growth may be unrealistic due to rising costs, softening demand, and operational complexities.
Structural market shifts and integration risks could limit competitive advantages, premiumization benefits, and long-term earnings momentum.
Fleet modernization, operational improvements, diversified earnings, strategic acquisitions, and digitalization are strengthening financial stability, efficiency, and long-term competitiveness.

Catalysts

About Deutsche Lufthansa

Operates as an aviation company in Germany and internationally.What are the underlying business or industry changes driving this perspective?

The market appears to be pricing in sustained, above-trend revenue growth for Lufthansa driven by elevated post-pandemic travel demand, continued international expansion (e.g., ITA Airways integration and additional wide-body deliveries), and successful upselling to premium and ancillary products-despite mounting evidence of softening yields and mixed forward bookings in key markets, which could undercut top-line expectations.
Expectations for material margin expansion may be overly optimistic, as rising location-based charges, regulatory taxes, and persistent labor cost inflation in Europe are structurally raising Lufthansa's cost base faster than productivity savings or digitalization measures can offset, putting downward pressure on net margins.
The current valuation seems to assume that Lufthansa will maintain a competitive advantage from its early adoption of fleet modernization and sustainable aviation fuel (SAF), yet delayed aircraft deliveries, block-seating, and the ongoing high cost of SAF undermine the pace and scale of cost savings and environmental differentiation, thereby limiting near-term and medium-term earnings growth.
Investor optimism around premiumization (e.g., Allegris, personalized service, higher willingness to pay) may ignore increasing demographic headwinds in Europe, the permanent shift in business travel patterns toward remote/hybrid work, and growing consumer and governmental pressure for short-haul modal shift to rail, all of which could structurally cap future high-margin revenue streams.
Significant faith is being placed in the company's multi-brand structure, international partnerships, and network effects to drive sustained earnings momentum, but operational complexity, integration risks (e.g., ITA, Technic, Cargo), and intensifying price competition from low-cost carriers and alternative transport modes threaten both operating efficiency and long-term return on capital.

Deutsche Lufthansa Earnings and Revenue Growth

Deutsche Lufthansa Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Deutsche Lufthansa's revenue will grow by 3.9% annually over the next 3 years.
Analysts assume that profit margins will shrink from 4.6% today to 4.2% in 3 years time.
Analysts expect earnings to remain at the same level they are now, that being €1.8 billion (with an earnings per share of €1.44). However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting €2.1 billion in earnings, and the most bearish expecting €1.2 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 6.5x on those 2028 earnings, up from 5.2x today. This future PE is greater than the current PE for the GB Airlines industry at 5.2x.
Analysts expect the number of shares outstanding to grow by 0.14% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 9.21%, as per the Simply Wall St company report.

Deutsche Lufthansa Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Lufthansa's ongoing fleet modernization-introducing next-generation, more fuel-efficient, and premium-equipped aircraft-will reduce operating costs and deliver visible financial benefits from 2026 onwards, supporting revenue growth, improved net margins, and enhanced customer satisfaction.
Successful execution of the Lufthansa Airlines turnaround plan, which is already showing tangible improvements in operational stability, punctuality, and productivity, is translating directly into lower irregularity costs, higher ancillary revenues, and a stronger financial foundation for sustainable earnings improvement.
Diversification and resilience of earnings through strong performance in Lufthansa Cargo and Lufthansa Technik (MRO), both of which benefit from macroeconomic volatility and long-term structural demand, provide stable revenue streams and protect group earnings in challenging passenger markets.
Integration and synergy realization from ITA Airways-already contributing positively to EBIT and ahead of expectations-combined with harmonization of digital platforms and frequent flyer programs, supports further network expansion, revenue synergy capture, and overall group earnings.
Strategic digitalization, automation, and centralized management of route networks are enabling Lufthansa to drive ongoing efficiency gains and cost reductions, supporting margin resilience and improved competitiveness in the face of external pressures.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of €7.654 for Deutsche Lufthansa based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €12.0, and the most bearish reporting a price target of just €5.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €43.3 billion, earnings will come to €1.8 billion, and it would be trading on a PE ratio of 6.5x, assuming you use a discount rate of 9.2%.
Given the current share price of €7.69, the analyst price target of €7.65 is 0.5% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

LHA: Market Headwinds And Aircraft Delays Will Shape Earnings Recovery Prospects