Assessing Air Canada (TSX:AC) Valuation as Shares Trade Below Analyst Targets

Air Canada (TSX:AC) has been drawing investor attention lately, especially with its recent share price movement. The stock saw a modest dip this past month, which has prompted renewed interest in how shifting demand and cost factors are affecting the airline’s outlook.

See our latest analysis for Air Canada.

After a tough stretch that saw Air Canada's share price dip more than 16% over the past three months, sentiment appears mixed as investors weigh travel demand and cost inflation against long-term recovery prospects. While recent news has been relatively quiet, the stock’s 1-year total shareholder return of -2.3% underscores a challenging period. However, the five-year total return of 21.6% hints at resilience and potential for renewed momentum if conditions improve.

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But with shares still trading at a notable discount to analyst price targets and mixed financial signals on display, the key question is whether there is genuine value to be unlocked here or if the market is already factoring in brighter prospects ahead.

Most Popular Narrative: 24.7% Undervalued

Air Canada’s fair value estimate, according to the most widely followed narrative, stands at CA$24.36, a significant premium to the current share price of CA$18.34. This sets the stage for a deeper look at the assumptions and catalysts that underpin the consensus view.

Aggressive international long-haul network expansion (notably into Latin America, Europe, and Southeast Asia), alongside successful development of sixth freedom traffic, positions Air Canada to capture a larger share of connecting global passengers. This supports both top-line growth and load factor resilience.

Read the complete narrative.

Want to know the secret sauce behind this valuation? The forecast relies on bold growth plays, contract changes, and a controversial earnings outlook. Are you ready to uncover which projections have analysts divided? Dive in to see what drives this surprising discount.

Result: Fair Value of $24.36 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent labor disruptions and stiffer competition on key international routes could still derail Air Canada's recovery story and create pressure on future earnings.

Find out about the key risks to this Air Canada narrative.

Build Your Own Air Canada Narrative

If the current take doesn’t quite fit your outlook or you’re keen to dig deeper into the numbers yourself, you can easily craft your own narrative and insights in just a few minutes. Do it your way

A great starting point for your Air Canada research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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