Canaccord In an earnings preview for Canadian airlines and aerospace companies, Canaccord Genuity’s Matthew Lee bumped his Air Canada ) target to $32 from $31 with a “buy” rating and lowered his Exchange Income Corp. target to $63 from $65 also with a “buy” recommendation. The averages are $29.95 and $63.25, respectively.
“When considering the outlook for airlines, investors appear to possess anticipation and concern in equal doses. In December, the JETS, which is a U.S.-weighted airline index, rebounded nearly 12 per cent as broader market sentiment, easing fuel constraints, and resilient consumer spending drove increasing interest in torquey aviation equities,” said Mr. Lee. “In January, pedestrian F24 guidance from DAL toppled the group amidst fears around costs, only for concerns to be assuaged weeks later by constructive outlooks from AAL and UAL. From a Canadian perspective, all eyes are on AC, which could act as a bellwether for travel appetite for the group. CJT, which has seen a meaningful rally since November, should also be in the spotlight given its transition to cash flow, while CAE, EIF, and CHR will be expected to execute on their near-term plans. ... While our estimates have been updated, our general views remain intact. We continue to prefer Air Canada given the substantial valuation discount against US peers, EIF and Cargojet for cash flow, and CAE for the long-term view on civil aviation.”