CAE shouldn’t be correcting like this, investor says

Newhaven Asset Management fund manager Rebecca Teltscher told BNN Bloomberg’s Market Call on May 19 that CAE (CAE Stock Quote, Chart, News, Analysts, Financials TSX:CAE) looks undervalued after being pulled down with airline stocks.

Teltscher said CAE is one of the few non-dividend-paying names Newhaven owns, reflecting her conviction that the share price is undervalued.

“The stock has come off, and I think it’s for the wrong reasons,” Teltscher said, pointing to pressure on airline stocks from higher oil prices and concerns about passenger traffic.

She said CAE’s civilian flight simulation business should be more resilient than airlines themselves because pilots still need training even if passenger volumes soften. She also pointed to a longer-term need for more pilots over the next decade.

“I think those longer-term secular trends are going to outweigh any short-term weakness that we’re seeing as a result of higher oil prices,” Teltscher said.

She added that CAE’s defence business is “good to have” as an additional support.

CAE shares have gained 3.07% over the past 12 months but are down 1.68% over five years. Of the analysts covering the stock, nine rate it “Buy,” six “Hold” and none “Sell,” with a consensus price target of $48.30.

-30-