MTU Aero Engines: Increasing Valuation on Higher Growth Assumptions in Spare Parts and Defense

We raise our fair value estimate for wide-moat MTU Aero Engines to EUR 416 from EUR 300, reflecting stronger growth assumptions for the aftermarket and defense segments in both the midterm and through Stage II expansion from 5.0% to 5.5%. Despite solid demand for new aircraft, deliveries remain constrained by persistent supply chain challenges. This extends the service life of older aircraft, driving higher demand for maintenance and spare parts. We expect both the OEM and MRO segments to benefit from maintained aftermarket demand, supporting years of recurring, profitable revenue as global air traffic expands.