On Wednesday, TD Cowen maintained a positive stance on shares of Air Canada (TSX:AC:CN) (OTC: ACDVF), increasing the airline's price target to C$25.00 from C$19.00 while reiterating a Buy rating. The revision follows a recent update to the firm's financial model, which now anticipates higher earnings for the airline.
The analyst's updated forecast includes a raise in the fourth-quarter earnings per share (EPS) estimate to C$0.30 and a full-year 2024 earnings before interest, taxes, depreciation, and amortization (EBITDA) projection of just over C$3.5 billion.
Looking further ahead, the expectations for fiscal year 2025 include revenue per available seat mile (RASM) increasing by 0.7%, cost per available seat mile excluding fuel (CASMex) rising by 4.2%, EBITDA of approximately C$3.7 billion, and free cash flow (FCF) of C$140 million.
The analyst highlighted the anticipation of additional details to be provided at Air Canada's investor day. Key topics of interest for investors include the airline's approach to sale-leaseback transactions, aircraft retirements, the total expected fleet size, and planned versus committed capital expenditures.
The stock price target of C$25.00 is based on a valuation of 3.5 times the estimated 2025 enterprise value to EBITDA (EV/EBITDA). The analyst's outlook suggests confidence in Air Canada's financial trajectory and potential for shareholder value growth over the coming years.
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