Goldman Sachs has initiated coverage of Melrose Industries (LON: MRO) with a Buy rating and a 730 pence price target, citing favourable dynamics in the aerospace sector and the company’s ability to deliver meaningful shareholder returns.
The bank highlighted in a note that the European aerospace market is exiting a period of significant volatility with passenger demand running ahead of supply.
Against this backdrop, Goldman is constructive on the engine aftermarket and favours companies well placed to capture near-term capital returns.
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Melrose has been steadily gaining attention from analysts this year. Deutsche Bank lifted its price target twice in recent months, most recently to 620p with a Hold rating, while Kepler Cheuvreux upgraded the shares to Buy in April with a 540p target, arguing that European aerospace valuations were overly discounted given strong long-term fundamentals.
Goldman’s analysts highlighted Melrose’s positioning in the recovery, emphasising both operational execution and scope for margin expansion.
They pointed to the company’s exposure to high-growth aftermarket activity and the prospect of disciplined capital allocation as reasons to expect outperformance.
The bank believes the company is well-positioned to benefit from strong aftermarket demand and improving pricing, offering investors significant near-term capital returns.
With sector tailwinds strengthening, Goldman views Melrose as one of the most attractive names in European aerospace.
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