See: Transat AT, Tesla/Twitter and BCE

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What to do with Transat AT, Tesla/Twitter and BCE shares? Here are some recommendations from analysts that are likely to move prices soon. Note: the author may have a completely different opinion than the one expressed by the analysts.

Transat AT (TRZ, $3.04): Desjardins analyst slightly raises his one-year price target

The airline posted better-than-expected financial results for the fourth quarter of fiscal 2022 last week, which pleased Benoit Poirier, an analyst at Desjardins.

“Demand is growing and the capacity offered was 91% of that offered in the same period in 2019, compared to 82% in the third quarter. The pace of bookings is currently similar to 2019. We believe that the title of Transat is approaching a turning point, but we await whether the execution will be there, especially given the company’s high debt. society”, explains the analyst.

Benoit Poirier also comments on Transat’s management targets for fiscal year 2023. The latter expects to deploy capacity equivalent to 90% of capacity in 2019 and to generate an adjusted operating income margin of 4% to 6%.

“We see these as positive steps towards a return to profitability for the business and expect an earnings before interest, tax, depreciation and amortization (EBITDA) margin of 4.9% in 2023. However, due to seasonality in demand, we believe negative profit margin (-3.6%) in the first quarter.Fiscal 2023 will be a transition period and we do not expect a return to positive cash flow until fiscal 2024, although management has said it wants to be as close to break-even as possible at the end of this exercise”, says the analyst.

Benoit Poirier introduces his forecasts for fiscal year 2025 with revenue of $3.1 billion (B$), an EBITDA margin of 11.4% and free cash flow of $135 million. “If we assume that the stock can trade at a ratio of 4.5 times the expected EBITDA of $376M in 2025, we arrive at a value of $8.14, which is well above the current price,” he says.

The analyst reiterates his “hold” recommendation on the stock, but raises its one-year target price from $3.25 to $3.50.

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