Air France-KLM shares advanced 2% in early Paris trading on Tuesday after Kepler Cheuvreux upgraded the airline to Hold from Reduce, citing fair value at the €11.50 price target.
The brokerage noted that absent a material escalation in the Iran crisis, the current share price reflects the company's business prospects. Kepler had downgraded Air France-KLM to Reduce roughly a month earlier, when it described the share price as "somewhat ambitious" following the onset of the Middle East conflict in February. Since that downgrade, the stock has declined by about 12%.
Kepler raised its current-year profit estimate for the airline by 20% following Air France-KLM's second-quarter results, while trimming mid-term forecasts by about 1%. The brokerage's estimates remain modestly below Visible Alpha consensus by a low- to mid-single-digit percentage.
Air France-KLM reported a second-quarter adjusted operating profit of €484 million, down from €736 million a year earlier but above the €327 million consensus among analysts polled by the company. The carrier also reduced its full-year capacity guidance, now expecting a 1% decline in short- and medium-haul flights alongside group-wide growth of between 2% and 3%. This follows a prior cut from a 3% to 5% growth forecast issued before the February escalation in the Middle East.
KLM Chief Executive Marjan Rintel highlighted that global uncertainty, rising costs and heightened competition would remain structural challenges for the airline.
