TSX:EIF - Post Discussion
Post by
retiredcf on Apr 16, 2024 9:02am
RBC Note
April 16, 2024
RBC ElementsTM: Q1/24 Flight Deck
Q1 Airlines & Aerospace Preview
Our view: In this report, we update our estimates for AC, BBD and CHR noting valuations across our coverage remain at the lower end of their historical ranges. Our Cdn Airlines & Aerospace Heatmap powered by RBC ElementsTM points to mixed leading indicators and strong coincident indicators (see Exhibit 1), with indications of stronger business travel (consistent with US peers), something we are keeping an eye on. Looking ahead, we believe airlines will remain pressured by lower fares and higher costs namely labour, with lower fuel (vs. last year) providing some reprieve. Additionally, our Bizjet Heatmap shows continued positive trends in utilization, used inventory, and wealth creation, which we view as tailwinds for BBD. BBD remains our top pick in airline/aerospace coverage on the back of a solid near-term demand backdrop, which we expect to support a meaningful FCF inflection in 2025. We also flag EIF as being attractively valued, and do not believe an uptick in growth from upcoming air ambulance contracts is appropriately reflected in the shares at current values.
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EIF: Q1 estimate unchanged and below consensus; price target remains at $65; maintain Outperform. Our Q1 estimate is unchanged into the quarter at $107MM, below consensus $110MM on lower Manufacturing EBITDA, reflecting the uncertainty surrounding Northern Mat and weak industrial indicators. Our 2024 estimate remains at $624MM, in line with consensus $623MM, in the mid to high range of 2024 guidance for EBITDA of $600–635MM. We continue to value the shares using a blended target multiple of 7.5x, and price target remains at $65.
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