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Air Canada stock target lifted, buy rating held on improved earnings outlook

EditorNatashya Angelica
Published 07/11/2024, 01:12 am
AC
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On Wednesday, TD Cowen maintained a positive stance on shares of Air Canada (TSX:AC:CN) (OTC: ACDVF), increasing the airline's price target to C$25.00 from C$19.00 while reiterating a Buy rating. The revision follows a recent update to the firm's financial model, which now anticipates higher earnings for the airline.

The analyst's updated forecast includes a raise in the fourth-quarter earnings per share (EPS) estimate to C$0.30 and a full-year 2024 earnings before interest, taxes, depreciation, and amortization (EBITDA) projection of just over C$3.5 billion.

Looking further ahead, the expectations for fiscal year 2025 include revenue per available seat mile (RASM) increasing by 0.7%, cost per available seat mile excluding fuel (CASMex) rising by 4.2%, EBITDA of approximately C$3.7 billion, and free cash flow (FCF) of C$140 million.

The analyst highlighted the anticipation of additional details to be provided at Air Canada's investor day. Key topics of interest for investors include the airline's approach to sale-leaseback transactions, aircraft retirements, the total expected fleet size, and planned versus committed capital expenditures.

The stock price target of C$25.00 is based on a valuation of 3.5 times the estimated 2025 enterprise value to EBITDA (EV/EBITDA). The analyst's outlook suggests confidence in Air Canada's financial trajectory and potential for shareholder value growth over the coming years.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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