Last Update 23 Jan 26

Fair value Increased 1.41%

MTX: Spare Parts Strength And Cash Flow Clarity Will Shape Future Returns

Analysts have modestly lifted their price target for MTU Aero Engines to about €419 from €413, reflecting updated assumptions around fair value, discount rate, revenue growth, profit margin and future P/E, alongside recent Street views that highlight both incremental price target moves and mixed confidence in the clarity of the company’s cash flow profile.

Analyst Commentary

Street research on MTU Aero Engines currently points to a mixed but fairly balanced view, with analysts fine tuning price targets and focusing closely on cash flow visibility and valuation risk.

Bullish Takeaways

Bullish analysts are comfortable assigning price targets around €409 to €419, which signals that, based on their models, the current valuation can be supported by their assumptions around revenue, margins and future P/E.
The modest lift in some targets suggests analysts see room for execution on existing plans rather than needing a major shift in the business model to justify current pricing.
Price targets that cluster in a relatively narrow band indicate expectations that earnings and cash generation can be aligned with current consensus assumptions, limiting the gap between fundamental value and share price in their view.
Maintaining ratings such as Equal Weight alongside tweaked targets points to an outlook where analysts see MTU as reasonably placed within its peer group on risk and return, without clear red flags in their base cases.

Bearish Takeaways

Some bearish analysts highlight that the company’s cash flow improvement does not have the same clarity as certain peers, which can cap enthusiasm around higher valuation multiples.
A Sector Perform type stance signals that, while the business is viewed as sound, there is caution about upside potential relative to other options in the sector.
Concerns around cash flow visibility can translate into a more conservative view on how quickly the balance sheet and shareholder returns might benefit from future cash generation.
The gap between the more cautious €360 price target and higher targets around €409 to €419 underscores uncertainty around execution, especially on turning headline earnings into consistent, transparent cash flow.

What's in the News

MTU Aero Engines plans an Analyst and Investor Day, giving the market a closer look at management's priorities, capital allocation thinking and medium term assumptions around the business model (Key Developments).
MTU Maintenance and Teledyne Controls announced a new partnership to provide engine health monitoring and predictive maintenance services, using Teledyne's Data Delivery Solutions to access full series flight data and support faster, deeper engine health insights (Key Developments).
Viva Aerobus is the launch customer for the MTU Maintenance and Teledyne collaboration, applying the new data driven maintenance approach to its A320 V2500 engines with the aim of improving operational efficiency and more proactive maintenance planning (Key Developments).

Valuation Changes

Fair Value: the price target estimate now stands at about €419.32, compared with €413.50 previously, implying a small uplift in modeled fair value.
Discount Rate: the updated discount rate is 5.66%, slightly below the earlier 5.70%, which can modestly increase the present value of future cash flows in valuation models.
Revenue Growth: the revenue growth assumption is now 10.05% versus 10.15% before, a marginally lower top line growth input.
Net Profit Margin: the profit margin assumption moves to 10.61% from 10.59%, reflecting a very small change in expected profitability levels.
Future P/E: the future P/E multiple used in the models is now 22.34x compared with 22.04x, indicating a slightly higher valuation multiple being applied.

Strong demand for fuel-efficient engines and expanding aftermarket services drive recurring revenue, while MTU's technological leadership secures future growth opportunities.
Diversification across commercial, military, and strategic partnerships enhances stability and positions the company for resilient margins despite geopolitical and regulatory uncertainties.
Heavy reliance on key new engine programs, supply chain fragility, and rising geopolitical and R&D costs threaten margins, profit stability, and financial flexibility.

Catalysts

About MTU Aero Engines

Engages in the development, manufacture, marketing, and maintenance of commercial and military aircraft engines, and aero-derivative industrial gas turbines in Germany, other European countries, North America, Asia, and internationally.What are the underlying business or industry changes driving this perspective?

The surge in global air travel demand and robust order intake for new, fuel-efficient engines like the GTF (highlighted by record deals with airlines such as Wizz Air, Frontier, and LOT) are expected to continue driving strong OEM and MRO revenue growth and expanding order backlog, translating to higher long-term revenue and earnings visibility.
Airlines' fleet modernization efforts and the growing focus on fuel efficiency and lower emissions support multi-decade replacement cycles; MTU's leadership in advancing geared turbofan technology and joint R&D for hydrogen-powered propulsion positions the company for continued margin expansion and future revenue streams from next-generation platforms.
Expansion of high-margin aftermarket and MRO services, with capacity enhancements at facilities like EME Aero and the Fort Worth site, will support recurring revenue and improved net margins as narrow-body and wide-body engines enter heavy maintenance cycles, leveraging ongoing fleet utilization growth.
The company's growing footprint in both commercial and military engine programs (with ramp-ups in EJ200 and T408 engines and involvement in strategic European defense collaborations) provides resilient, diversified revenue streams that reduce cyclicality and underpin stable long-term earnings.
Heightened focus on supply chain localization, operational excellence, and European partnerships improves MTU's strategic value during an era of geopolitical and regulatory uncertainty, supporting more stable contract flows and potential margin resilience even amid rising protectionist risks.

MTU Aero Engines Earnings and Revenue Growth

MTU Aero Engines Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming MTU Aero Engines's revenue will grow by 9.9% annually over the next 3 years.
Analysts assume that profit margins will shrink from 10.4% today to 10.3% in 3 years time.
Analysts expect earnings to reach €1.1 billion (and earnings per share of €20.97) by about September 2028, up from €852.0 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 21.6x on those 2028 earnings, down from 23.9x today. This future PE is lower than the current PE for the GB Aerospace & Defense industry at 106.7x.
Analysts expect the number of shares outstanding to decline by 0.59% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 5.7%, as per the Simply Wall St company report.

MTU Aero Engines Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Increasing geopolitical tensions and evolving U.S./EU tariff regimes pose a significant, unpredictable risk, with management explicitly unable to quantify the ultimate impact of U.S. tariffs and potential countermeasures; escalation could disrupt MTU's market access, increase costs, and compress profit margins, thereby threatening both revenue growth and net margins over the long term.
High revenue concentration in next-generation engine programs, particularly the GTF (PW1100G) engine family, exposes MTU to heightened operational and financial risks if material availability issues, technical failures, or warranty/compensation costs persist, which could erode net margins and dent earnings stability for years.
Large, front-loaded profits in H1 are tied to exceptionally strong sales of spare and lease engines, with management warning of a normalization (decline) in these sales in H2 and beyond; this creates a risk of margin compression and volatile earnings as extraordinary contributions fade, potentially leading to lower profit growth or unexpected shortfalls.
Ongoing supply chain fragility, including recent shortages stemming from incidents (e.g., SPS facility fire) and persistent delays for spare parts of mature platforms, underline MTU's vulnerability to long-term inflationary pressures, production bottlenecks, and the risk of future delivery shortfalls, all of which could constrain revenue and free cash flow.
Rising R&D and capacity expansion costs-such as the USD 120 million investment in Fort Worth, 30-year license payments for LEAP engine access, and intensified commitments in hydrogen technology-raise the risk that high, recurring capital outlays may outpace cash generation if market uptake slows or competitive dynamics worsen, thereby pressuring net margins and reducing financial flexibility.

Valuation

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

The analysts have a consensus price target of €394.75 for MTU Aero Engines 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 €485.0, and the most bearish reporting a price target of just €296.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €10.9 billion, earnings will come to €1.1 billion, and it would be trading on a PE ratio of 21.6x, assuming you use a discount rate of 5.7%.
Given the current share price of €379.0, the analyst price target of €394.75 is 4.0% higher. 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.

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