Buy Rating on Chorus: Undervalued Contracted Cash Flows and Strategic Repositioning Driving Upside

Daryl Young, an analyst from Stifel Nicolaus, has initiated a new Buy rating on Chorus Aviation (CHR).

Daryl Young has given his Buy rating due to a combination of factors that highlight both undervaluation and attractive, visible cash flows. He argues that the market is not fully reflecting the long-term, contract-based earnings and free cash flow generated by Chorus’ capacity purchase agreement with Air Canada, which runs through 2035 and largely insulates the company from traditional airline volatility. At current trading levels, the implied multiples on EBITDA and free cash flow are seen as compelling, especially given the stability of these contractual revenues.

Young also points to capital allocation and strategic repositioning as key supports for the Buy recommendation. Chorus has already used its transitional period, following the sale of its third-party leasing business, to repurchase a meaningful portion of its shares while developing a new growth platform in aviation services, including MRO, parts, charter, and training activities. He believes the company’s dependence on Air Canada is mitigated by the deep operational integration, ownership ties, and limited practical alternatives for Air Canada, as well as a high likelihood of lease renewals beyond 2026. Looking forward, Young sees additional upside from potential bolt-on acquisitions, possible extensions of aircraft leases under the CPA, and further opportunistic buybacks, all of which could act as catalysts for share price appreciation.