CFO stock purchases can be extremely informative insider transactions. CFOs have detailed knowledge of their firms’ financials, and some studies have found that these insiders earn higher profits following their purchases of company shares than CEOs do.

In this report, we are going to highlight a large CFO stock purchase at Deutsche Lufthansa AG (LHA:GR). Deutsche Lufthansa is a German airline company. Its brands include Lufthansa, Eurowings, Austrian Airlines, and Brussels Airlines. It is listed on Deutsche Börse’s Xetra and currently has a market cap of approximately €12.19 billion.

Insider Buying at Deutsche Lufthansa

2iQ data shows that on March 20, CFO Remco Steenbergen purchased 30,000 LHA shares at a price of €9.44 per share. This trade cost the insider approximately €283,200 and increased his holding to 130,000 shares.

Large Purchase

A couple of things stand out here.

Firstly, Mr. Steenbergen has made a relatively large purchase in nominal terms. This trade represents the largest insider purchase at Deutsche Lufthansa for over two years.

Secondly, the insider has increased the size of his holding significantly with this trade. By increasing his holding from 100,000 shares to 130,000 shares, he has boosted the size of his position by 30%.

This suggests that he is quite confident the stock is set to move higher.

Broker Upgrade

Deutsche Lufthansa stock was recently upgraded from ‘neutral’ to ‘buy’ at UBS.

The broker said that it sees upside risk to consensus forecasts on the back of a stronger summer, and medium-term upside risk to margins due to continued strong leisure demand, returning business/group traffic, and a recovery in Asia.

"We think Lufthansa will continue to see a traffic recovery and restoration of profitability despite airfreight tailwinds subsiding," the broker said.

It added that Deutsche Lufthansa’s balance sheet should continue to de-gear and that the company is likely to regain its investment grade status in the near term.

And UBS is not the only broker that is bullish on the airline stock right now. Back in early March, analysts at HSBC upgraded the stock from ‘hold’ to ‘buy’. Also in early March, analysts at JP Morgan lifted their price target for LHA from €10.70 to €14.50. That price target implies share price upside of around 50% right now.

In light of this positive sentiment from brokers, we see the insider buying here as a bullish signal.

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