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Watch: Air Canada, BlackBerry and Gildan

While the resumption of leisure travel seems on track, Kevin Chiang cannot say the same for business travel. (Photo: 123RF)

What to do with the titles of Air Canada, BlackBerry and Gildan? Here are some recommendations from analysts likely to move prices soon. Note: the author may have a totally different opinion from that expressed.

Air Canada (AC, $24.33): A solid flight plan

Kevin Chiang of CIBC Capital Markets has high hopes for Air Canada’s recovery, and not just because air traffic is expected to return to pre-pandemic levels from 2024.

After attending its last shareholders’ meeting, the analyst believes that the airline has indeed several tricks up its sleeve, which it could not really use at the start of 2020. Among its projects on the ice which should allow it to “generate more revenue”, Kevin Chiang includes a greater deployment of the Aeroplan program and its new reservation system, its cargo service and the update of its fleet.

The company could pull its levers to generate growth opportunities, some of which have emerged during the pandemic.

It also stated its objectives by fiscal year 2024. The margin of its profit before interest, taxes and amortization should reach 19%, with a leverage of 1.1x, reports Kevin Chiang, who believes that the company is on the right track to get there.

In 2022, its adjusted earnings per share fell from -$1.87 ($) to -$1.70 for 2022, but from $1.76 to $1.74 in 2023. Its earnings before interest, taxes and amortization adjusted should reach 1.403 million dollars (M$) in 2022, and 2,910 M$ in 2023, whereas CIBC Capital Markets previously bet on 1,339 M$ and 2,911 M$ respectively.

The airline estimates that its operating costs per adjusted available seat mile in 2024 should be up 2 to 4% compared to those in 2019. The analyst recalls that Air Canada’s capacity will be at 95% of its pre-pandemic level. Thus, the closer its recovery will be to 100%, the more its expenses should resemble what it observed in 2019, he believes, doing better than its competitors who have also issued their forecasts in the inflationary context. .

While the resumption of leisure travel seems on track, Kevin Chiang cannot say the same for business travel. Air Canada has also indicated that they should reach 75 to 80% of their pre-pandemic level in 2023. By pulling the right levers, the air carrier will be able to reduce the vacuum created by this slower recovery, estimates the analyst.

Even if he adjusts his calculations to take into account the new forecasts issued by management, these are all in all similar to those anticipated by CIBC Capital Markets, which is why the analyst maintains his target price at $35, and its recommendation to “outperform” sector.

BlackBerry (BB, US$7.46): Company struggles to hit targets

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