To watch: Transat AT, Cascades and Quebecor

To watch: Transat AT, Cascades and Quebecor
To watch: Transat AT, Cascades and Quebecor

Transat management indicates that the company’s profit margins will contract in 2024. (Photo: 123RF)

What to do with the titles of Transat AT, Cascades and Quebecor? Here are some analyst recommendations likely to move prices soon. Note: the author may have an opinion completely different from that expressed.

Transat AT (TRZ, $3.43): a possible refinancing could have a harmful effect on shareholders, fears an analyst from National Bank Financial

The Quebec air carrier indicates that its profit margins will contract in 2024 and Cameron Doerksen, analyst at National Bank Financial (FBN), responds by reducing its target price from $3.00 to $2.25. He maintains his rating for the stock at “underperform.”

Transat management informs that the earnings before interest, taxes and depreciation (EBITDA) margin for the whole of 2024 will be around 5% while its previous forecast placed it between 7.5% and 9%. . She had indicated earlier that the margin would probably be at the lower end of this range.

The FBN analyst who predicted a margin of 7.4% now reduces it to 5.3%, to take into account this new information from management. It added that it is also reducing its estimates for 2025 to reflect more conservative assumptions about revenue growth and the costs of keeping more aircraft on the ground.

The carrier will face several headwinds this year, notes the analyst. He mentions, among other things, the engine problems of its Airbus A321LR which force it to keep 4 of its aircraft on the ground, a number which could increase to 6 by the end of the year and to 8 in 2025. He notes also the effect of threats of strikes on 1er and at 2e quarters.

Transat’s profitability is closely linked to transatlantic travel during the summer period. Cameron Doerksen recalls that on this account he had previously highlighted price pressures linked to the increase in carrier capacity.

Cascades (CAS, $10.25): we could have seen the trough in the price of container cardboard on 1er quarter, but nothing is won yet

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