What to do with titles from CAE, Coveo and Alithya? Here are some analyst recommendations that could move prices soon. Note: the author may have a totally different opinion from that expressed by the analysts.
CAE (CAE, $28.40): the civil sector continues its solid performance
CAE’s civil segment continued its strong performance in the fourth quarter with a 53% increase in revenue compared to the same quarter in 2022.
Revenues from this market segment stopped at $661 million, slightly above National Bank Capital Markets expectations ($650 million), said analyst Cameron Doerksen. The operating margin of 24.6% was also higher than the financial institution’s forecast (24%).
Cameron Doerksen also points out that CAE’s simulation center was used at 78% of its capacity, an increase compared to the third quarter (+5%), which allowed the company to return to a use similar to that of before the pandemic. There is still additional demand for the training of airplane pilots, particularly in the Asia-Pacific, which still gives room for manoeuvre.
CAE also reported backlog of $5.7 billion at the end of the fourth quarter compared to $5.6 billion at the end of the third. The company also received 62 flight simulator orders for fiscal 2023, the second highest total in its history after the 78 ordered in 2019.
On the side of the defense sector, the margins are still a little thin, advance Cameron Doerksen. Revenues were $526 million in the fourth quarter (+14%), still ahead of National Bank forecasts ($507 million), but margins came in at 5.7%, slightly less than what than expected by the financial institution (6%). The backlog remains healthy ($5.1 billion) and CAE has announced that new contracts won over the past year should offer higher margins. The analyst predicts better visibility on profitability in the coming quarters, with margins expected to reach 10%.
The analyst believes that CAE should continue to benefit from growth in its civil sector, which will be supported by the upcoming recovery in pilot training as well as an increase in flight simulator deliveries.
National Bank maintains its forecast of outperformance of CAE shares against its sector of activity as well as its target price of $37.