Stifel GMP on Monday upgraded its rating on the shares of Air Canada (AC.TO) to buy from hold while raising its price target to C$25.50 from C$20.00 following the air carrier's third-quarter results.

"Q3 results were much better-than-feared with AC managing costs well amid a tough environment, and with a boost from lower fuel prices. We are upgrading our recommendation to Buy from Hold as the environment appears to be rationalizing faster than we expected and given increased clarity on 2025. Management noted a more balanced capacity outlook, upside from falling fuel prices, stable demand for leisure travel (forecasting healthy outlook for the next three quarters), business travel recovering, and high-margin AsiaPacific routes being restored. Moreover, AC expects to be active on capital returns, noting the potential to re-lever its balance sheet up to ~1.5x and given expectations for break-even/positive 2025 FCF. Despite AC's >40% share price gain since its August lows, the stock is still trading at 3.1x EBITDA, well below its pre-pandemic average of 3.9x and th U.S. peers at 5.7x, supportive of a continued catch-up trade," analyst Daryl Young noted.

(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)

Price: 21.79, Change: +0.28, Percent Change: +1.30