While Scotia Capital analyst Konark Gupta is assuming a soft landing for the economy in 2024, he is continuing to warn investors about “uncertaintities” in the Canadian transportation and aerospace industry, pointing to “macro, central bank policies, government elections, and global conflict.”
In a research report released Monday, he “tempered” his estimates for the year to below the consensus expectations on the Street due to these concerns.
Exchange Income Corp. (EIF-T, “sector outperform”) to $60 from $62. Average: $63.25.
Analyst: “We continue to like EIF. Shares were down in 2023 and have also underperformed since the market troughed on October 27, 2023. We believe the market at times paints EIF with the same brush as commercial airlines, which is not justified given the company’s niche airline subsidiaries likely account for only less than 25-30 per cent of EBITDA and are far more resilient than commercial airlines due to their focus on northern communities (high entry barriers, low competition and government support). In addition, we think investors recently got concerned about the year-over-year normalization in Northern Mat’s earnings, which could potentially take several quarters to rebound. We are attracted to EIF’s highly diversified portfolio of niche businesses, high dividend yield (5.7 per cent) with a low payout ratio, and continued double-digit EBITDA growth, driven by organic growth/recovery and acquisitions, despite headwinds at Northern Mat, inflation and macro uncertainty.”