Analyst Sheila Kahyaoglu from Jefferies maintained a Hold rating on CAE (CAE – Research Report) and increased the price target to $27.00 from $25.00.
Confident Investing Starts Here:
- Quickly and easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions
- Receive undervalued, market resilient stocks straight to you inbox with TipRanks' Smart Value Newsletter
Sheila Kahyaoglu’s rating is based on a combination of factors impacting CAE’s financial outlook. The company is expected to experience a modest revenue growth of 6% in FY26, which is a deceleration compared to the previous year. This is largely due to anticipated “destocking” in the Civil segment during the first half of the year, as well as challenges in the US hiring environment for pilots, which affects the demand for initial training services.
On the other hand, the Defense segment shows potential for growth, driven by increased defense spending and a strong backlog. However, the overall growth is tempered by the unwinding of legacy contracts and a slight reduction in margins compared to previous peaks. Additionally, while CAE’s free cash flow conversion has improved significantly, the stock is trading below its average discount to free cash flow yield, suggesting limited immediate upside. These mixed factors contribute to the Hold rating, reflecting a cautious approach amid both opportunities and uncertainties.
Kahyaoglu covers the Industrials sector, focusing on stocks such as Boeing, GE Aerospace, and American Airlines. According to TipRanks, Kahyaoglu has an average return of 11.7% and a 63.18% success rate on recommended stocks.
In another report released yesterday, CIBC also maintained a Hold rating on the stock with a C$38.00 price target.