Lufthansa Shares Trade at Half Liquidation Value, Analyst Says in Bullish Initiation

mwb Research initiated coverage of Deutsche Lufthansa AG (ETR: LHA) with a Buy rating and a €21.00 price target in a note on Thursday, implying 152% upside from Wednesday’s close, arguing the stock is deeply undervalued relative to its underlying assets.

Analyst Jens-Peter Rieck said Lufthansa, Europe’s largest airline group, trades more than 50% below its liquidation value, with the company’s owned fleet alone covering approximately 90% of enterprise value.

Meanwhile, Lufthansa Technik, the group’s maintenance, repair and overhaul unit, is said to be worth roughly 40% of EV on standalone MRO multiples, leaving the airline franchise, cargo business and ITA Airways upside valued at effectively zero.

“The owned fleet provides a natural valuation floor,” Rieck wrote.

mwb Research believes the market has been extrapolating disruption as a permanent state following a series of macro shocks since 2019, from COVID-19 through to Middle East tensions.

The firm models normalisation instead and sees significant upside even below management’s own targets. “We model normalization and see compelling upside even below management’s own targets,” Rieck noted.

On earnings, mwb Research projects group revenue growing at a 5.4% CAGR, with fleet renewal toward 58% next-generation aircraft by 2030 mechanically adding approximately three percentage points to margins. The firm models a 7% EBIT margin by 2030, below management’s own guidance corridor of 8%-10%.

Rieck also highlighted a wide gap between consensus free cash flow estimates of €1.5 billion for 2030 and management’s medium-term guidance of more than €2.5 billion.