Analyst Coverage Change
Today on January 23rd, Scotiabank Capital(Rank#21) released a research report maintaining its “Outperform” rating on Air Canada’s stock. The analyst has a 12 month price target forecast of $28 per share, up from $26.
Air Canada Stock Forecast & Analysis
Air Canada has forecasts from 15 analysts suggest that the average target price for the stock over the next 12 months is CAD 24.76. The average analyst rating for the company is “Strong Buy,” indicating that many analysts believe the stock will perform well in the future. However, Stock Target Advisor has a slightly different analysis, with a “Bearish” rating based on 2 positive signals and 8 negative signals. This suggests that while there are some positive factors present, there are also some potential risks to consider. The current stock price for Air Canada is CAD 21.79 and it has seen changes of -0.23% over the past week, +13.08% over the past month, and -1.54% over the last year. Factors to consider when analyzing Air Canada’s stock performance are the impact of COVID-19 pandemic on the travel industry and the overall economic conditions in the country.
Fundamental Analysis
Positive
- High market capitalization: The company is one of the largest entities in its sector and is among the top quartile. Such companies tend to be more stable and have a larger and more diversified revenue stream. This can provide a cushion during times of economic downturns or industry-specific challenges.
- Positive free cash flow: The company had positive total free cash flow in the most recent four quarters. This indicates that the company is generating more cash than it is using, which can be a sign of financial strength and stability. Positive free cash flow can also be used to invest in growth opportunities, pay dividends, and pay down debt.
Negative
- Poor risk adjusted returns: The company is delivering below median risk adjusted returns compared to its peers, indicating that the returns may be unpredictable and risky.
- High volatility: The total returns for the company have been volatile and above median for its sector over the past 5 years. This may not be suitable for investors with low risk tolerance.
- Below median dividend returns: The company’s average income yield over the past 5 years has been low compared to its peers, which may be a concern for investors looking for income from their investments.
- Overpriced compared to earnings: The stock is trading high compared to its peers on a price to earning basis and is above the sector median, which could be a sign that it is overpriced.
- Overpriced compared to book value: The stock is trading high compared to its peers median on a price to book value basis, which could be a sign that it is overpriced.
- Highly leveraged: The company is in the bottom half compared to its sector peers on debt to equity and is highly leveraged, which could be a risk.
- Negative cash flow: The company had negative total cash flow in the most recent four quarters
- Overpriced on free cash flow basis: The stock is trading high compared to its peers on a price to free cash flow basis, it is priced above the median for its sectors which could be a sign that it is overpriced.
The fundamental analysis of the AC’s stock is “Very Bearish” with a direct FA score of 2 out of 10, where 10 very bullish.
