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On Wednesday, RBC Capital Markets adjusted its financial outlook for CAE Inc . (NYSE:CAE:CN) (NYSE: CAE (TSX:CAE)), a manufacturer of simulation technologies and training services for aviation and defense.
The firm raised its price target on the company's shares to Cdn$38.00, up from the previous Cdn$34.00, while maintaining an Outperform rating. According to InvestingPro data, CAE's stock has shown strong momentum with a 25% gain over the past six months, currently trading at $24.01.
The revision comes as RBC Capital's analyst noted a decrease in the estimated Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for the third fiscal quarter to Cdn$276 million, down from Cdn$290 million.
This aligns with the consensus estimate of Cdn$275 million. The reduction reflects ongoing supply chain challenges that have been delaying commercial aircraft deliveries. InvestingPro analysis shows CAE maintaining a FAIR overall financial health score, with particularly strong price momentum metrics despite these challenges.
Looking ahead, the analyst's forecast for fiscal year 2025 EBITDA is set at Cdn$1,106 million, closely matching the consensus estimate of Cdn$1,107 million. Despite this, the projected growth for Civil adjusted operating income is estimated at +6%, which is slightly below the consensus of +8% and under the company's guidance of approximately 10%.
The target price is grounded on a valuation multiple of 11.2 times, which remains unchanged. However, the valuation year has been shifted to FY2027, contributing to the new price target of Cdn$38.00. Key areas of focus for the quarter will include margins in the Defense segment, the repercussions of supply chain issues and temporary hiring freezes on the Civil segment's results, and the ongoing selection process for a new CEO, which has seen activist involvement.
For deeper insights into CAE's financial health and growth prospects, including exclusive ProTips and comprehensive valuation metrics, investors can access the full Pro Research Report available on InvestingPro.
In other recent news, CAE Inc. has witnessed significant developments, including a change in stock ratings by TD Securities and CIBC (TSX:CM), and a raised price target by BMO Capital Markets. TD Securities has downgraded CAE's stock rating from Buy to Hold, while CIBC shifted the rating from Outperformer to Neutral. BMO Capital Markets, however, has maintained an Outperform rating and increased its price target for the company.
These adjustments come in response to CAE's recent financial performance. The company reported an 8% year-over-year increase in consolidated revenue, reaching $1.14 billion, and an adjusted operating income of $149 million. Furthermore, CAE's backlog has reached a record high of $18 billion, marking a 50% increase from the previous year.
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