Cargojet’s stock has a tailwind, Beacon Securities says

Cargojet’s (Cargojet Stock Quote, Chart TSX:CJT) most recent quarterly results show how ecommerce tailwinds are accelerating for the company, says Beacon Securities analyst Ahmad Shaath.

On Tuesday, Cargojet reported its Q3, 2018 results. The company posted EBITDA of $31.5-million on revenue of $114.1-million, a topline that was up 27.6 per cent over the same period last year.

“Cargojet continues to successfully execute its financial and operational plan,” CEO Ajay Virmani said. “Our team continues to optimize our network and fleet as we adapt to our growth as the leading e-commerce middle-mile service provider in Canada. We also continue to expand our air cargo footprint around the world through our scheduled and ad hoc ACMI and charter services.”

Shaath says the quarter bested his expectations. He notes that the addition of a Sunday flight was a big help to the company and notes the shift towards a seven day a week delivery schedule is becoming the standard for ecommerce. He says this development is putting the company in-line with that trend and gives investors a way to gain exposure to ecommerce growth.

“We continue to view Cargojet as the best investment vehicle to capitalize on the secular growth in e-commerce, with its reduced risk profile enhanced by near-monopolistic market position and near-zero exposure to fuel price increases (passed through),” the analyst said.

In a research update to clients today, Shaath maintained his “Buy” rating and one-year price target of $94.00 on Cargojet, implying a return of 15 per cent at the time of publication.

Shaath thinks Cargojet will generate EBITDA of $127.5-million on revenue of $456.9-million in fiscal 2018. He expects those numbers will improve to EBITDA of $140.8-million on a topline of $487.7-million the following year.