BMO Cargojet Inc. is benefitting from a “robust demand environment,” according to BMO Nesbitt Burns Fadi Chamoun.
The analyst raised his financial expectations in a research note released Tuesday, projecting the Mississauga-based company to see double-digit, year-over-year growth in domestic volume growth as well as “very strong” international demand.
“E-commerce continues to drive domestic network demand growth even in these later stages of the pandemic and against tough comps,” he said. “CJT is further benefitting from a recovery in B2B and a pick-up in industrial demand. We expect domestic network revenues to increase 12 per cent year-over-year in Q2/21 and the outlook for H2/21 remains very positive.”
“We expect charter revenues will re-accelerate in the coming quarter. It appears that CJT has picked up additional charter missions including on the transpacific market. With supply/demand balance in the air freight sector not expected to be restored before 2023, CJT should continue to enjoy plenty of opportunities to maximize charter revenues over the coming quarters. We have revised our charter revenue expectations higher, including to $16-million from $12.0-million in Q2/21.”
Despite a slower-than-anticipated start to its expanded commercial relationship with Amazon, Mr. Chamoun raised his 2021 EBITDA forecast to $267.9-million from $263.7-million and his 2022 projection to $297.4-million from $289.4-million.
“The demand environment for airfreight continues to be well-supported as we enter H2/21, with the persistence of e-commerce growth and further industrial/B2B recovery,” he said. “Our forecast receives a modest boost from additional charter/ad hoc missions and as new ACMI routes ramp up. At current levels, CJT stock continues to offer one of the best GARP investment opportunities in our coverage.”
He maintained an “outperform” rating and $245 target. The current average is $257.