Panlop/iStock via Getty Images
CAE (NYSE:CAE) on Wednesday was downgraded to Underperform from a previous investment rating of Neutral by analysts at Bank of America Securities. They said the Canadian maker of civilian and military flight simulators is less profitable than they previously estimated.
“While we appreciate CAE's (CAE) position to benefit from the global recovery in commercial air traffic and pilot shortage, we grow more concerned that CAE's (CAE) significant capacity growth in simulators may be outpacing demand,” Ronald Epstein, analyst at BofA Securities, said in a November 29 report.
CAE’s (CAE) planned sale of its healthcare business is positive for the company because the proceeds will help to cut debt, BofA said.
“We view the divesture as a strategic positive given the segment historically contributed mid-single digits to total revenue and low-single digits to total operating profit,” according to BofA’s report. “Additionally, we would expect the increased focus on the defense and civil aerospace segments as a positive.”
BofA cut its earnings estimates for CAE (CAE) and lowered its price target to C$26 a share from C$37 a share. In U.S. dollars, the new price target is $19 a share.
| Bank of America Securities Estimates for CAE Inc. (CAE), November 29 | |||||
| Revenue (mln) | |||||
| New | Old | ||||
| 2023E | $4,617.9 | $4,613.2 | |||
| 2024E | $5,042.1 | $5,037.3 | |||
| 2025E | $5,443.0 | $5,437.9 | |||
| EPS | |||||
| New | Old | ||||
| 2023E | $1.15 | $1.25 | |||
| 2024E | $1.35 | $1.45 | |||
| 2025E | $1.65 | $1.75 | |||