Lots of readers but pretty much talking to myself here. GLTA National Bank Financial analyst Cameron Doerksen sees Cargojet Inc. set to benefit from a “positive” air cargo market when it reports third-quarter results on Oct. 4 with further growth to come from e-commerce through its contract with China-based Great Vision HK Express.
“Cargojet’s domestic network has been outperforming some P&C peers with Q2 domestic revenue up nearly 11 per cent year-over-year,” he said. “We believe domestic network volumes for Cargojet have remained healthy through Q3. August data from IATA shows that global air freight traffic in the month was up 11.4 per cent year-over-year, the ninth consecutive double-digit year-over-year increase driven largely by higher international traffic due to strong e-commerce demand.”
“Cargojet has benefited from the increased demand for e-commerce with its new scheduled charter contract supporting Chinese e-commerce volumes announced in Q2 (3-year deal worth $160-million based on a minimum of three flights/week). Q3 will show the first full quarter of the new contract, and we expect the company’s All-in Charter revenues to be up 43 per cent year-over-year.”
In a research note released Thursday, Mr. Doerksen raised his 2025 revenue and earnings forecast, leading him to increase his target for the Mississauga-based company to $158 from $154 with an “outperform” recommendation (unchanged). The average on the Street is $162.09.
“With a positive outlook for CJT’s domestic network volumes and growth from the new contract signed in Q2 supporting e-commerce volumes between China and Canada, we see an acceleration of growth for the company that will continue in the coming quarters,” he said. “In that context, the current valuation of 8.1 times EV/EBITDA based on our updated 2025 forecast looks compelling, especially when compared to the historical forward average for the stock of 11.0 times.”