This Canadian airline stock is a buy, analyst says

Beacon Securities analyst Donangelo Volpe maintained a “Buy” rating and $120 target on Cargojet (Cargojet Stock Quote, Chart, News, Analysts, Financials TSX:CJT) in a May 6 update, saying the company delivered a solid first quarter despite macro headwinds.

Cargojet reported Q1 revenue of $255-million, up 2% year-over-year and ahead of Volpe’s $243-million estimate and consensus at $244-million. Core domestic, charter and ACMI revenue totalled $217-million, up 3% and above his $209-million forecast.

Domestic network revenue was flat at $105-million, ahead of Volpe’s $101-million estimate, which he said reflected continued e-commerce-driven consumer demand. All-in charter revenue rose 26% to $58-million, beating his $49-million forecast, helped by Venezuela charters and demand tied to the grounding of third-party MD-11 freighters.

ACMI revenue fell nine per cent to $54-million, below Volpe’s $58-million estimate, as aircraft were redeployed from longer Asia and Europe routes to South America. Management said ACMI is now closer to a normalized run-rate.

Adjusted EBITDA was $82-million, ahead of Volpe’s $78-million estimate and consensus, with a 32% margin that remained in line with management’s 30%-plus target for 2026.

Volpe said Cargojet generated $87-million of free cash flow in the quarter, helped by operating cash flow and proceeds from aircraft sales. Debt fell to $915-million from $988-million at year-end, while net debt to Adjusted EBITDA improved to 2.8x from 3.0x.

He introduced fiscal 2027 estimates of $1.069-billion in revenue and $340-million in Adjusted EBITDA, implying four per cent revenue growth and a 32% margin.

Volpe noted the stock trades at 6.5x next-12-month Adjusted EBITDA, a 35% discount to its 10-year average of about 10x.

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