CAE stock upgraded at National Bank

Ahead of the company’s first quarter results, National Bank Financial analyst Cameron Doerksen has upgraded CAE (CAE Stock Quote, Chart, News, Analysts, Financials TSX:CAE).

As reported by the Globe and Mail, the analyst May 6th changed his rating on the stock from “Sector Perform” to “Outperform” and raised his 12-month price target from $40.00 to $43.00. In a research update, he explained the reasoning behind the move.

“We downgraded the stock in January as we viewed the relative valuation at that time as fair, and we saw some near-term headwinds for the Civil segment as well as growing uncertainty around tariffs,” he wrote. “The stock has fallen slightly since our downgrade and some of our concerns have since been alleviated.”

The analyst says macro headwinds aren’t quite what they seem when it comes to CAE.

“There has been some recent market concern over the potential impact on CAE from a slowing airline sector,” Doerksen added. “Demand for airline pilot training is ultimately driven by global airline capacity growth. Although airline profitability has historically been severely impacted by economic slowdowns, actual flying activity has been much less cyclical and in the event of a significant airline slowdown, pilot training will remain resilient as 70 per cent of training is driven by regulated recurrent training.