This analyst just raised his price target on Air Canada

RBC Dominion Securities analyst James McGarragle says Air Canada’s (Air Canada Stock Quote, Chart, News, Analysts, Financials TSX:AC) second-quarter results should come in ahead of Street expectations, helped by stronger cargo revenue and lower fuel costs.

As reported by the Globe and Mail, in a June 29 report, McGarragle maintained his “Outperform” rating on Air Canada and raised his target to $28.00 from $22.00 The average target is $23.34.

“Our Q2 EBITDA moves to $688-million from $653-million, above consensus of $661-million, driven by increased cargo revenue estimates resulting from disruptions in the Middle East,” McGarragle said.

His revised estimate remains within management’s Q2 guidance range of $575-million to $725-million.

McGarragle also raised his 2026 EBITDA estimate to $3.05-billion from $2.99-billion, broadly in line with consensus at $3.06-billion. He said the increase reflects lower expected fuel costs and better-than-expected demand trends, with potential upside if fuel prices remain near current levels.

The analyst expects Air Canada management to provide Q3 EBITDA guidance when it reports results and said that guidance could come in above consensus of $950-million if fuel prices remain stable.

“We continue to view 2026 as a transitory year and anticipate a significant FCF inflection in 2028-2029 off normalizing capital expenditures,” McGarragle said.

McGarragle raised his target multiple to four times from 3.5 times, citing better visibility on fuel prices.

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