On Wednesday, BMO (TSX:BMO) Capital Markets adjusted its outlook on CAE (TSX:CAE) Inc . (NYSE:CAE:CN) (NYSE: CAE) shares, a global leader in training for the civil aviation, defense, security, and healthcare markets.
The firm's analyst lowered the price target to C$34.00, down from the previous C$37.00, while maintaining an Outperform rating on the stock.
CAE recently announced a series of significant corporate developments, including a senior leadership reorganization and the impairment of $604 million in goodwill and intangible assets within its Defense segment. Additionally, the company reported $90.3 million in unfavorable contract adjustments related to eight legacy Defense contracts.
The company has also released its preliminary fourth quarter and full-year 2024 results ahead of the final audited report, which is scheduled for release on May 27, 2024.
A management conference call is set to follow on May 28, 2024. In conjunction with these updates, CAE provided its fiscal year 2025 outlook.
BMO Capital Markets has expressed a mixed reaction to these announcements, noting that the preliminary results and guidance have led to a downward adjustment in their EBIT forecast for the fiscal years 2025 to 2027 by 3-5%. The revised price target of C$34 reflects this updated forecast and the recent developments reported by the company.
Investors and analysts are anticipating the final audited results and management's discussion to gain further clarity on CAE's financial health and strategic direction moving forward.
InvestingPro Insights
For investors seeking a deeper dive into CAE Inc .'s financials, InvestingPro provides a real-time snapshot of the company's market performance and valuation metrics. With a market capitalization of $6.32 billion and a P/E ratio currently standing at 30.91, CAE appears to be trading at a premium relative to its earnings. However, when considering the adjusted P/E ratio for the last twelve months as of Q3 2024, which is at 25.76, and the PEG ratio at 0.56, the stock may be viewed as more reasonably priced in terms of its growth rate.
InvestingPro Tips suggest that CAE is trading at a low P/E ratio relative to near-term earnings growth, which could be attractive to value investors. Additionally, the company is expected to be profitable this year, as it has been over the last twelve months, which may instill confidence in its financial stability. Notably, CAE does not offer a dividend, which might influence the investment decisions of income-focused shareholders.
With an impressive revenue growth of 20.66% over the last twelve months as of Q3 2024, and a gross profit margin of 28.43%, CAE's financials reflect a robust operational performance. Furthermore, the fair value as estimated by analysts stands at $22.63, while InvestingPro's own fair value assessment comes in higher at $25.73, suggesting potential upside from the previous close price of $20.26.
To explore a comprehensive list of financial metrics and additional InvestingPro Tips, which currently includes six more insights for CAE, investors are encouraged to visit InvestingPro. For those interested in a yearly or biyearly Pro and Pro+ subscription, use the coupon code PRONEWS24 to receive an additional 10% off.
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