2023-10-04 18:50:18
Couche-Tard will unveil its new five-year plan on October 11. (Photo: Getty images)
What to do with the securities of Air Canada, Laurentian Bank and Alimentation Couche-Tard? Here are some analyst recommendations likely to move prices soon. Note: the author may have an opinion completely different from that expressed.
Air Canada (AC, $19.03): a valuation that predicts the worst
Investors are worried that strong demand for air travel is not sustainable, which Cameron Doerksen, analyst at National Bank Financial, understands?
“However, bookings and pricing are currently strong through early 2024, while domestic and US flight capacity remains restricted. Rising fuel costs have weighed on airline stocks, but prices have fallen recently and Air Canada is in a better position than many competitors to navigate this situation,” says the analyst.
He explains that the average price of fuel reached $1.14 per liter in the third quarter, down 13.5% year-on-year, but up 12.8% compared to the price revealed by Air Canada in the second quarter. .
He cites the most recent data from Statistics Canada, which shows that air ticket prices in August were down 19.9% year-on-year in the country. “Despite everything, prices remain 4.5% higher than those of August 2019. We must not forget that during the months of July and August 2022, prices were inflated by the normalization of air transport following the pandemic , while capacity was still limited,” he says.
The latter also expects Air Canada to continue its deleveraging and present a net debt/EBITDA ratio (earnings before interest, taxes and amortization) of 1.7 times at the end of 2023, which was 5. 7 times by the end of 2022.
“After updating our data, Air Canada shares are trading at 3.5 times the enterprise value/EBITDA ratio for 2023 and 2024, below its pre-pandemic average of 4-5 times,” specifies t -he.
Cameron Doerksen adds that Air Canada’s stock valuation is the lowest of all the stocks he covers. He therefore believes that the current value of the stock reflects the fears of the financial markets.
He maintains his buy recommendation on the stock, but reduces his one-year target price slightly, from $35 to $32. It gives the stock a value of 4.5 times the enterprise value/EBITDA ratio forecast in 2024.
Laurentian Bank (LB, $30.27): operational challenges in addition to strategic challenges
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