Record Backlog And Government Funding Will Expand Bus Market
NFI Group's average analyst price target has decreased from C$23 to a range between C$20 and C$22. Analysts cite tempered expectations for revenue growth and profit margins in their latest updates.
Analyst Commentary
Recent analyst updates reflect a nuanced view of NFI Group's outlook, as opinions from the Street highlight both areas of optimism and continuing concerns around valuation and execution.
Bullish Takeaways- Bullish analysts maintain Outperform ratings, indicating expectations that NFI Group can outperform broader market returns, even though there have been recent target reductions.
- Some analysts identify a potential earnings inflection point in the second half of 2025, with forecasts of improving profitability as supply chain disruptions moderate.
- Earlier this year, positive adjustments included an upgraded rating and a significant price target increase, reflecting confidence in management's ability to execute through challenges.
- Analysts suggest that easing operational hurdles and improved seat supply could support revenue growth in future periods.
- Bearish analysts point to trimmed price targets, reflecting concerns about tempered expectations for revenue growth and narrowing profit margins.
- Ongoing supply chain issues and pressure on margins continue to create a cautious outlook for near-term performance.
- Uncertainty about the timeline for operational improvements may affect short-term valuation and sentiment.
- Potential for upside is seen as more limited until clearer evidence of margin recovery and sustainable earnings growth is observed.
What's in the News
- NFI Group reaffirmed its earnings guidance for Fiscal 2025, with revenue expected in the range of $3.8 billion to $4.2 billion (Key Developments).
- New Flyer of America Inc., a subsidiary of NFI Group, unveiled a major innovation for its Xcelsior CHARGE FC 40-foot hydrogen fuel cell-electric bus. The company increased onboard fuel capacity by 17.5 kilograms and extended the vehicle range by up to 120 miles (Key Developments).
Valuation Changes
- Fair Value: Decreased slightly from CA$22.58 to CA$22.42, indicating a marginal downward revision in expected intrinsic share value.
- Discount Rate: Increased from 9.15% to 9.45%, reflecting a slightly higher perceived risk or required return on investment.
- Revenue Growth: Lowered from 21.8% to 17.4%, suggesting analysts now expect a slower pace of sales expansion.
- Net Profit Margin: Declined from 2.49% to 1.69%, signaling reduced expectations for profitability.
- Future P/E: Rose from 23.8x to 28.2x, which indicates a higher multiple is being applied to forecasted earnings even though growth and margins are softer.
Disclaimer
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