Sales of men’s clothing were strong at 15%, while she estimates that those on the women’s side (10%) were burdened by lower conversion due to a poor range of colors and sizes at lululemon. . (Photo: 123RF)
What to do with Transat AT titles, Cascades and lululemon? Here are some analyst recommendations likely to move prices soon. Note: the author may have a completely different opinion than that expressed by the analysts.
Transat AT (TRZ, $3.00): returns less attractive than expected for the Atlantic
Returns on Atlantic flights are less attractive than expected, which led Transat AT to present results below National Bank Financial’s forecasts in the second quarter.
Revenues stood at $973 million, up 11.8% compared to the same quarter the previous year, indicates analyst Cameron Doerksen. If transport capacity increased by 13% annually, in addition to a 12% growth in the number of passengers, efficiency fell by 7.5%, with a loading rate of 85.5 % (86.1% last year).
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $37.6 million, below National Bank’s forecast ($40 million) and the market consensus of $41 million.
Cameron Doerksen recalls that Transat reduced its EBITDA margin forecast to 5% in May, whereas it had previously forecast it in a range between 7.5% and 9%. In addition to this change, the company notes that it is struggling with lower performance on Atlantic flights, flights which represent the majority of revenue for the summer (i.e., quarters three and four ).
Transat reveals that the loading rate is approximately two basis points lower than last year and that yields are down 8% on high comparables. The company adds that it now expects a capacity increase of 11% rather than the 13% previously planned.
The analyst points out that in addition to having to deal with lower yields, it will have to face several obstacles, including the possibility of a strike. He says he remains cautious about the stock while awaiting a comprehensive plan to refinance its debt, a plan which could have negative repercussions for shareholders.
National Bank Financial maintains its forecast of underperformance compared to its sector of activity for the stock of Transat AT as well as its target price of $2.25.
Cascades (CAS, $9.56): pressurized container cardboard
