NEW YORK, April 4 (Reuters) - The stock of EADS, the parent of plane maker Airbus, is 'dead money' at best and could face pressure from delivery delays, cost overruns, lower demand and a perceived need to protect jobs, newspaper Barron's said in its April 5 edition.
EADS faces challenges from last year's 85 percent decline in global net new plan orders, the newspaper said. The company has a large backlog of jet orders, as does rival Boeing, and could face the cyclical drop in production and deliveries that typically follows a pick-up in orders, it said.
Portfolio manager Jean Charles Meriaux, at DNCA Finance in Paris, said he fears the delays and high expenses incurred in developing the A380 commercial jet and A400M military transport could spill over to Airbus' new A350 commercial jet, which has more than 500 orders and is slated for service in 2013, Barron's reported.
Meriaux also said the company, effectively controlled by France and by Germany's Daimler AG, must navigate a cross-country political thicket in trying to protect jobs at French and German factories, while also trying to boost shareholder returns.
Andrew Dickson, of Dickson Capital Management, who is shorting EADS stock, expressed concern that Airbus' ratio of net new orders to planes delivered was just 0.54 in 2009, Barron's reported.
Dickson said that owning EADS stock is best when production is at a trough, not a peak, and projected that production could fall further, Barron's reported.
EADS shares have risen by roughly one-third in the last four months.
Barron's said the shares trade at roughly 21 times expected 2010 profit, but a recent Deutsche Bank Securities report said EADS' own earnings projections imply that it 'won't be more than break-even' this year.
'At best, EADS stock is dead money,' Barron's said. 'If profitability and new orders don't improve, it could see a rough landing.'
Shares of EADS last traded at about 15.25 euros.
(Reporting by Jonathan Stempel; Editing by Leslie Adler) Keywords: EADS/AIRBUS BARRONS (jon.stempel@thomsonreuters.com +1 646 223 6317; Reuters Messaging: jon.stempel.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
EADS faces challenges from last year's 85 percent decline in global net new plan orders, the newspaper said. The company has a large backlog of jet orders, as does rival Boeing, and could face the cyclical drop in production and deliveries that typically follows a pick-up in orders, it said.
Portfolio manager Jean Charles Meriaux, at DNCA Finance in Paris, said he fears the delays and high expenses incurred in developing the A380 commercial jet and A400M military transport could spill over to Airbus' new A350 commercial jet, which has more than 500 orders and is slated for service in 2013, Barron's reported.
Meriaux also said the company, effectively controlled by France and by Germany's Daimler AG, must navigate a cross-country political thicket in trying to protect jobs at French and German factories, while also trying to boost shareholder returns.
Andrew Dickson, of Dickson Capital Management, who is shorting EADS stock, expressed concern that Airbus' ratio of net new orders to planes delivered was just 0.54 in 2009, Barron's reported.
Dickson said that owning EADS stock is best when production is at a trough, not a peak, and projected that production could fall further, Barron's reported.
EADS shares have risen by roughly one-third in the last four months.
Barron's said the shares trade at roughly 21 times expected 2010 profit, but a recent Deutsche Bank Securities report said EADS' own earnings projections imply that it 'won't be more than break-even' this year.
'At best, EADS stock is dead money,' Barron's said. 'If profitability and new orders don't improve, it could see a rough landing.'
Shares of EADS last traded at about 15.25 euros.
(Reporting by Jonathan Stempel; Editing by Leslie Adler) Keywords: EADS/AIRBUS BARRONS (jon.stempel@thomsonreuters.com +1 646 223 6317; Reuters Messaging: jon.stempel.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.