Based on the consensus of 13 analysts, the average Air Canada stock price target is CAD 26.62 per share over the next year. Analysts rate Air Canada stock as a ‘Strong Buy’. Stock Target Advisor’s analysis of the Air Canada stock is Bearish, which is predicated upon 1 positive signal and 8 negative signals.
The last closing price of Air Canada Stock TSX was CAD 17.60. Air Canada’s stock price has changed -2.70% during the past week, +1.73% during the past month, and -27.11% over the past year.
AC stock price TSX fell -0.51% from the closing price of CAD 17.69 the day before.
About Air Canada:
Air Canada offers domestic, international, and U.S transborder flights. It provides scheduled passenger services through capacity purchase agreements on other regional carriers in the Canadian market, the Canada-U.S. transborder market, and the international market to and from Canada, under the brand names Air Canada Vacations and Air Canada Rouge.
Air Canada offers air cargo services on local and international flights connecting Canada with markets in Europe, Asia, South America, and Australia, as well as on transborder routes between Canada and the United States. Additionally, the business manages, creates, markets, and distributes cruise packages in addition to operating and developing travel loyalty programs. In Canada, Saint-Laurent serves as the home base for Air Canada, which was established in 1937.
Why Air Canada Stock Price Could Increase?
The following factors are currently in favor of an increase in the Air Canada Stock price:
- High Market Capitalization: In the domestic Canadian Market, Air Canada is one of the largest entities in its sector with CAD 6.33B of Market CAP. The competition is still quite low hence Air Canada’s stock price tends to be more stable.
- Successful International Operations: Air Canada is not only providing passenger services in Canada but also operating successfully in the international markets including the U.S. The business seems to be very profitable.
- Low Stock Price: Air Canada’s stock price is trading low and far from its record highs which increases the possibility of high returns on invested capital.
- Positive Stock Forecasts: Air Canada’s stock forecast from analysts shows a positive trend in the share price increment.
- High Growth Potential: Air Canada has growth potential. It can extend its operations in other international markets to expand its revenue growth.
- Strong Financial Performance: Based on the Q2 Financial Report of Air Canada stock, analysts are hopeful that the Air Canada Stock Price may increase by 28.56% to CAD 29.47 or more.
Why Air Canada Stock Price Could Decrease?
Shares of Air Canada are not entirely upbeat. There are some negative aspects as well.
- Aging Aircraft: The aircraft in Air Canada’s fleet are getting older and have been in service for a long period. It needs to be replaced, which will cost a lot of money. The company has recently updated its operational upgrading initiatives.
- Significant Debt: In the wake of the Covid-19 outbreak, the company’s debt has increased significantly. It may limit its profitability and growth in the long run.
- Market Competition: On a global scale, Air Canada may have to deal with strong market competition. The business is not really in a good position in its sector.
World Corporate Sustainability Report-ESG Achievements of Air Canada Stock:
Air Canada has taken significant post-pandemic initiatives for environmental and community improvement. The International Airline industry was greatly affected by Covid-19. However, Air Canada has launched a variety of sustainable programs in the corporate sustainability report.
The key takeaways of this sustainability report include:
- Air Canada unveiled its new Climate Action Plan in 2021, which set the challenging benchmark to reach its long-term objective of reducing environmental emissions to zero by 2050.
- The Leave Less Travel Program was introduced by Air Canada to facilitate corporate travelers in reducing their carbon footprint and the negative impact on the environment.
- The return of 10,000 pre-employed people after the Covid-19 pandemic, new hires in the Air Canada group, and the training programs will support the group’s growth, development, and better customer relations.
- To ensure the safety of the employees and the customers during the journey, Air Canada operated under biosafety measures through the leading Air Canada CleanCare+ program.
- $1 million was raised by the group in 2021 while $600,000 was given to support 160 non-profitable organizations.
- The Aeroplan member donation program successfully completed 15 years and the group donated 65 million points with the help of this program.
Air Canada has a continuous focus on the development of the business to increase not only the safety of employees and customers but also the environment. The Air Canada released its Q2 2022 financial report which is aligned with the programs on climate-related Financial Disclosures (TCFD).
Air Canada Q2 Financial Report-Highlights:
The financial performance of Air Canada stock TSX reported in the Q2 Report includes;
- In comparison to Q2 Report 2021, operating capacity has been raised five times.
- Passenger revenues and operating revenues increased to $3.441 & $3.981 billion which is approximately eight times and five times higher than the second quarter of 2021 respectively.
- From the second quarter of 2021, operating expenses increased to $4.234 billion from $2.264 billion.
- $253 million of operating loss which improved from $1.133 billion in Q2 2021.
- EBITDA (Earnings before interest, taxes, depreciation, and amortization) improved from $656 million to $154 million.
- Net loss of $386 million improved from $1.165 billion as of Q2 2021.
What’s The Future of Air Canada Stock?
Air Canada’s stock price may continue to decline as the challenges grow. During the pandemic fall, the AC stock price fell below $10 per share. Air Canada has a strong market share and a solid balance sheet which predicts the stock stability in the long run.
However, inflation, impending recession, and a hike in oil prices are some factors. That may cause AC stock prices to remain low. In conclusion, it seems that AC investors may have to wait longer to see the stock price rise high.
Air Canada Stock– Expert Analysis:
According to the fundamental analysis of the Air Canada stock, it has benefits and drawbacks.
- Air Canada’s revenue & earnings growth is positive for the coming years.
- Analyst estimation for business development expects the group’s revenue to rise.
- The average analyst 12-month Air Canada stock price target is $22.57 which shows a market upbeat.
- The total returns for Air Canada stock are volatile and above the median for its sector over the last 5 years.
- The average income yield has been low over the last 5 years and the risk-adjusted returns are unpredictable.
- Air Canada has a poor financial situation in terms of net debt and has a low EBITDA.
- STA Research maintains the Air Canada stock price target of CAD 18 and rates as ‘Hold’.
- Scotia Bank Capital rates the Air Canada stock forecast as ‘Outperform’ and maintains the CAD 26 price target.
Conclusion:
Air Canada’s stock forecast varies from one analyst to another. Air Canada stock has both strengths and weaknesses. Analysts rate Air Canada stock forecast with a consensus Strong. Buy rating and CAD 26.62 per share over the next 12 months.
The company does not pay dividends to the investors. To increase its growth and to pay back its debt, the company is reinvesting its profits. Air Canada stock is an attraction to investors who are interested in stocks with growing potential, long-term stability, and higher performance.
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