Analyst: Raymond James "Investors should sell Air Canada shares after the fourth quarter showed “massive seasonal fluctuations” in its operating margin and a “notable” drop in revenue per available seat mile, said Raymond James analyst Ben Cherniavsky.
“All airlines confront this dilemma to some degree, but seasonality seems to confound Air Canada with particular vengeance,” he said. “Until this variable becomes less influential, we believe the company’s stock will be prone to sizable volatility around each quarter, which makes for good trading opportunities.”
He also expressed concern over the airline’s strategy for its Rouge line, the impact of a volatile Canadian dollar, an accelerating capital spending cycle and management’s “very tepid” first-quarter outlook."
Target: Mr. Cherniavsky cut his target price to $5.00 from $8.00 and the stock’s rating to “underperform” from “market perform.” The analyst consensus price target over the next year is $9.48, according to Thomson Reuters.