Inside the Market’s roundup of some of today’s key analyst actions
) believing they were on track to hit both third-quarter and full-year 2024 guidance “with potential near-term upside more likely coming from better margins rather than better sales .”
While noting core business, excluding discontinued SKUs, has been growing by a 5-per-cent compound annual growth rate over the past several years, he did note macroeconomic conditions are “one thing that worries management, as management cited a generally weak apparel environment for the past 18 months.”
“In addition to the direct operating impacts from the strike threat, Air Canada will see some other accounting impacts. Firstly, based on the negotiated terms of the contract, Air Canada will be required to retroactively make adjustments to its pilot cost accrual assumptions going back to Q4/23. We therefore expect a large catch-up cost accrual that likely will be run through the operating expenses in either Q3 or Q4.
After adjusting his forecast for the airline to include a lower fuel price assumption, a cut to his yield and load factor assumptions to reflect the labour disruption’s impact on pricing and bookings an higher go-forward labor cost assumptions, Mr. Doerksen reduced his target for Air Canada shares to $22 from $24, keeping an “outperform” recommendation. The average on the Street is $21.94.
Mr. Landry said he came away impressed from a Tuesday tour of the facility for sell-side analysts as well as presentations by the senior management team “Longer-term, management aims to increase gross margins into the 35-36-per-cent range,” he said. “We do not expect the company gets there in 2025 given the GTA DC is not fully utilized and given pressures from the new Vancouver DC. We expect 2025 gross margin to decline 30bps from 2024 levels of 33.9 per cent.”
Cent Facility Sector Target Increase Management Rating Brampton Markham Stifel
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