$MTX: We put together a response to a bearish sellside note last Friday: https://t.co/wV7kMAmRJb. We remain long $MTX and our €545 fair value is unchanged. Since our report, bears have focused on “over-earning,” spare engines, and aftermarket earnings durability. We address these concerns directly and why the assumptions behind them do not hold. Spare engine fears drive the bear case. The recent note assumes €12.5m profit per engine and mix falling to 8% in a few years. Both assumptions are flawed and even the analyst flags key inputs as highly uncertain. Real profit is closer to €6m and as $SAF reiterated just last week, demand remains strong. With more defensible inputs, a supposed €200m+ EBIT headwind falls to ~€100m and will be absorbed over many years, not a compressed decline. As production rises, lower mix does not mean lower dollars. The math does not support the narrative. Furthermore, imbalance payments are not “over-earning.” They are receivables from work already performed. Removing these payments from EBIT while ignoring the reversal that drives future cash flow is a one-sided adjustment – not a "normalization" framework. At the end of the day, current sentiment in civil aerospace is understandable given the macro backdrop. These stocks trade on sentiment in periods of uncertainty, diverging from resilient fundamentals until fears abate and prices snap back. That dynamic is evident today. We continue to see massive upside for patient investors.
