2023-06-12 21:12:27
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What to do with Transat, Saputo and TD Bank shares? Here are some recommendations from analysts likely to move prices soon. Note: the author may have a totally different opinion from the one expressed.
Transat AT (TRZ, $4.72): Despite good results, the company’s debt and fuel price volatility worry the Desjardins analyst
While the share price has been soaring since May, the air carrier and tour operator disclosed its results for the second quarter of 2023 last week, and these exceeded expectations.
These somewhat surprising results are attributable to travel demand, which remained resilient in the face of deteriorating economic conditions, notes Benoit Poirier, analyst at Desjardins Securities.
Given management’s positive comments on reservations and lower fuel prices, the analyst believes that the firm will end the year near the upper limit of its new profit margin forecast corridor. Management revised its forecast for its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margin from 4-6% to 5.5-7.0% for 2023.
Transat is beginning to approach a turning point, the analyst believes. Nevertheless, he prefers to wait for additional signals regarding the continuation of business given the firm’s high level of indebtedness and the volatility of fuel prices and the exchange rate.
Benoit Poirier maintains his recommendation to Keep the title, but he nevertheless increases his target price from $4.00 to $5.25, thus taking into account the current increase in the stock market valuation of the title.
Q2 revenue reached $870 million, which was somewhat lower than analysts’ consensus forecast of $902 million. However, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $56.1 million compared to the consensus forecast of $39.1 million. For their part, earnings per share show a negative result of $0.21 per share, while the consensus was rather expecting $0.67 per share.
Saputo (SAP, $30.93): Investors suddenly doubt recovery
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