CIBC Maintains “Outperform” rating on Air Canada (AC:TSX)

Canadian Manufacturing Shows Signs of Stabilization Amid Economic Concerns

Analyst Rating Coverage

CIBC (Rank#17), a Canadian investment bank, has maintained its Outperform rating and $31 target price on Air Canada’s stock, which is the country’s major airline. This rating and target price reflect CIBC’s positive outlook on Air Canada’s prospects and its belief that the stock represents an attractive investment opportunity for investors.

CIBC’s Outperform rating on Air Canada is based on several factors. First, the bank sees the ongoing recovery in the global travel industry as a positive catalyst for Air Canada. Air Canada, with its extensive network of routes and strong market position, is well-positioned to benefit from this recovery.

Second, CIBC notes that Air Canada has taken proactive measures to strengthen its financial position during the pandemic. The airline has implemented cost-saving initiatives, including workforce reductions, capacity adjustments, and other cost management measures to mitigate the impact of the pandemic, inflation and macro events on its operations. Air Canada has also raised additional capital through various financing arrangements, including debt issuances and equity offerings, to improve its liquidity and financial flexibility. CIBC views these actions positively and believes that Air Canada’s financial position has improved, which bodes well for its future prospects.

Third, CIBC highlights Air Canada’s focus on enhancing its customer experience and loyalty program. The airline has been investing in its product offerings, including cabin upgrades, onboard amenities, and digital solutions, to enhance the customer experience and loyalty. Air Canada’s Aeroplan loyalty program, which was revamped in 2020, has been well-received, and the airline has been leveraging it to drive customer engagement and revenue growth. CIBC believes that these customer-focused initiatives can help Air Canada strengthen its competitive position and drive long-term revenue growth.

Lastly, CIBC considers Air Canada’s valuation as attractive. With a target price of $31 per share, CIBC believes that the stock is trading at a discount to its intrinsic value. The target price represents a significant upside potential from the current market price, indicating that CIBC sees Air Canada as undervalued and expects the stock to outperform in the coming months.

However, it’s important to note that investing in airline stocks, including Air Canada, comes with risks. The airline industry is highly competitive and subject to various risks, including fuel price volatility, regulatory changes, geopolitical events, and economic conditions. The current economic and political environment poses risks to the airline industry.

AC Stock Forecast & Analysis

The average analyst target price for Air Canada, based on forecasts from 18 analysts, is CAD 25.80 over the next 12 months. The average analyst rating is Strong Buy. Stock Target Advisor’s analysis of Air Canada is Neutral, considering 5 positive signals and 5 negative signals. Air Canada’s stock price at the last closing was CAD 19.21, with a change of +2.51% over the past week, -3.08% over the past month, and -13.70% over the last year.

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