2023-10-20 18:17:53
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What to do with CAE, Scotiabank and Netflix titles? Here are some analyst recommendations likely to move prices soon. Note: the author may have a completely different opinion than that expressed by the analysts.
CAE (CAE, $29.50): an emerging defense market that provides opportunities
The deterioration of the global geopolitical situation will provide opportunities for companies operating in the defense sector, which might particularly benefit CAE, estimates Royal Bank Capital Markets.
It was Lockheed Martin that recently stated that the “global threat landscape is growing.” Analyst James McGarragle sees three long-term trends that might benefit CAE: a busy geopolitical environment, evolving defense technologies, and national defense strategies that emphasize interoperability.
He recalls the conflicts currently taking place in Europe, the Middle East and Asia and expects that the independent training platform as well as its simulation solutions will be in demand to help meet the demand of the armed forces in preparedness, government agencies, security organizations around the world and original equipment manufacturers.
As for the outlook, Lockheed Martin management expects sales growth of less than 5% for 2024, while Royal Bank’s forecast for CAE is above 5% for 2024 and 2025.
Despite these positive points for the Quebec company, the analyst still notes that Lockheed Martin mentions that its value chain remains restricted due to longer lead times. He sees this as a short-term risk to CAE’s margin improvement, one of investors’ points of emphasis, which might change their sentiment towards the stock.
The National Bank maintains its forecast of outperformance of CAE shares compared to its sector of activity as well as its target price of $37.
Scotiabank (BNS, $59.95): a restructuring that will have effects in 2024
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