Chorus Aviation price target trimmed at CIBC

Following first quarter results, CIBC analyst Kevin Chiang has lowered his price target on Chorus Aviation (Chorus Aviation Stock Quote, Chart, News, Analysts, Financials TSX:CHR).

On May 6, CHR reported its Q1, 2024 results. The company posted EBITDA of 109.1-million on Operating Revenue of $426.2-million, a topline that was up 2.6% over the same period last year.

“Throughout the first quarter, Chorus continued to perform well and delivered results in line with our guidance. We made solid progress on debt reduction and generation of cash flows from operations and asset sales,” said CEO Colin Copp. “Chorus generated free cash flow of $102.1-million compared with $73.1-million in Q1 2023, and improved its leverage ratio to 3.4 at March 31, 2024, from 3.6 at Dec. 31, 2023.”

“We expect continued strong cash generation and are increasing our 2024 guidance for consolidated adjusted EBITDA and free cash flow, as well as the majority of guidance for RAL, including net proceeds from asset sales,” commented Mr. Copp.

As reported by the Globe and Mail Chiang May 8 reiterated his “Outperformer” rating, but lowered his price target on CHR from $3.75 to $3.25.

The analyst summarized where he is at with the Chorus story right now.

“Chorus reported Q1 results that beat expectations on both EBITDA and EPS,” Lee wrote. “While the financials were solid, our key highlight was the firm’s increased F24 aircraft sales forecast, which reflects an improving environment for the trade of assets. In our view, a more active aircraft market is crucial for Chorus’ asset-light transition, which requires both the sale of its current portfolio (US$400-million in aircraft) and the raise of US$500-million for Falko Fund 3. While management noted that fundraising progress has been limited, the firm continues to expect Fund 3 to be fully raised by the end of the year, with capital deployment occurring in F25/F26. With guidance for EBITDA and FCF raised slightly, we have increased our estimates for the year, primarily reflecting the beat in Q1. We continue to be constructive on the long-term CHR story and view Q1 as a step in the right direction but opt to remain on the sideline until we see more progress on both the sale of assets and raise of F3.”