Air Canada wins price target raise at Citi

Citi analyst Stephen Trent sees good things on the horizon for Air Canada (Air Canada Stock Quote, Chart, News, Analysts, Financials TSX:AC).

As reported by the Globe and Mail, Trent November 18 maintained his “Buy” rating on AC while raising his price target from $21.00 to $28.50.

The analyst explained the reasoning behind the move.

“We rate Air Canada Buy, which is based on strong global potential for a continued recovery in international long-haul passenger revenue, and what looks to be a stock price dip,” he wrote. “Although the carrier’s margins seem unlikely to catch those of several of its southern peers, this carrier has the most international long-haul exposure among Citi’s Americas Airline coverage.”

Trent said he expects that a rally in shares of AC that began this fall has legs.

“Citi’s 2025E earnings from continued operations for Air Canada remain 13 per cent below reported 2019 levels,” he said. “However, over the past five years, the carrier’s TSX-listed shares remain down 50 per cent, in spite of the recent weeks’ rally. As the carrier’s earnings continue to recover, driven in part by Trans-Pacific flow that is still spooling up, Air Canada’s share price performance could start catching up with its earnings performance, as we have seen with some of the U.S. network majors.”