Cargojet. Buy, Sell or Hold?

In a Nov. 5 note, Paradigm Capital analyst Razi Hasan said Cargojet (Cargojet Stock Quote, Chart, News, Analysts, Financials TSX:CJT) reported third-quarter results that missed expectations amid continued macro and trade-related headwinds.

Revenue came in below both Paradigm’s forecast and consensus, with declines of more than 20% year-over-year in the ACMI and Charter segments reflecting ongoing global trade uncertainty.

Cargojet posted revenue of $219.9-million, down 10.5% year-over-year, compared with Hasan’s estimate of $227.4-million and consensus of $237.4-million. Domestic Network revenue rose 6.3% to $99.6-million, but ACMI revenue fell 22.2% to $54.6-million and Charter revenue declined 20.7% to $32.9-million. Adjusted EBITDA of $70.4-million was essentially in line with Paradigm’s $70.5-million forecast but below consensus at $76.2-million, while adjusted EPS of $0.32, down 78% year-over-year, missed both the $0.64 estimate and $0.91 consensus.

Hasan said that despite weakness in the ACMI and Charter businesses, management expects to sustain solid short-term EBITDA margin performance. The company generated free cash flow of $152.4-million, up 219% year-over-year, aided by the sale of one Boeing 767-300 and the lease of a 757-200 to a third party, resulting in a net decrease of two aircraft and a total fleet of 41. In the fourth quarter, Cargojet plans to take delivery of one converted 767-300 and complete the sale of another, leaving fleet size unchanged.

The company also announced the pending retirement of Co-CEO Jamie Porteous, effective Dec. 31, 2025, with current Co-CEO Pauline Dhillon set to assume the sole CEO role on Jan. 1, 2026.

Hasan characterized the quarter as “negative overall,” noting that results were in line to slightly below Paradigm’s expectations but weaker than consensus “across the board.” He said the Domestic Network remains a strong segment, but “persistent international trade headwinds continue to pressure ACMI and Charter freight volumes,” adding that these challenges now appear less transitory than previously expected.

Cargojet, a Canadian air-cargo carrier specializing in overnight freight, ACMI, and charter services, continues to face tariff-related uncertainty in U.S. trade flows.

In an October note, Hasan maintained his “Buy” rating but lowered his 12-month price target to $135 from $139, citing those ongoing pressures. He forecast Adjusted EBITDA of $321.9-million on $990.6-million of revenue in fiscal 2025, improving to $350.5-million on $1.07 billion in fiscal 2026, and said near-term softness does not alter his long-term positive view on Cargojet’s balance-sheet flexibility and core domestic strength.

-30