CIBC Capital Markets maintained its outperformer rating on the shares of Chorus Aviation (CHR.TO) and raised its price target to C$31.00 from C$30.00 after the company reported its first-quarter financial results on May 7.
The company's Q1 results were broadly in line with CIBC's expectations and continue to reinforce the durability of the company's contracted cash flow profile, noted analyst Alexander Augimeri.
While parts sales revenue has been down ~30% Y/Y for two consecutive quarters, this weakness largely reflects the timing of several parts sales transactions that closed shortly after quarter end, as well as tougher comparisons against prior year periods of higher-than-typical parts activity, Augimeri said. As a result, CIBC sees a return to positive Y/Y growth in the parts sales segment beginning in Q2/26.
"Separately, CHR will begin to lap the previously announced wind-down of UN related flying in Q3/26," the analyst added. "Taken together, we believe the upcoming quarters should mark a transition away from recent noise in Y/Y reported results and toward a cleaner Y/Y growth profile across CHR's parts sales and contract flying segments."
CIBC said, stepping back, it continues to view parts sales as a "structurally attractive business" with recurring demand characteristics and a long-term growth profile of ~5% annually, but with "inherent lumpiness" on a quarterly basis.
"Q2/26 will also reflect a full quarter contribution from the Kadex acquisition, which has historically grown at a 5% - 10% rate, providing incremental support to segment growth going forward," added CIBC. "For context, we had previously modeled the Kadex acquisition closing at the end of Q2/26."
Price: $24.22, Change: $+1.03, Percent Change: +4.44%