Paradigm launches coverage of Cargojet with a “Buy” rating

“Clearer Skies Ahead”.

That’s the overall assessment of Cargojet (Cargojet Stock Quote, Chart, News, Analysts, Financials TSX:CJT) from Paradigm Capital analyst Razi Hassan.

In a research report to clients March 4, the analyst initiated coverage of CJT with a “Buy” rating and 12-month price target of $150.00, implying a return of 63%, including dividend.

“While freight transportation continues to be under pressure, we feel Cargojet has navigated well through this challenging environment. We applaud management’s effort to offset industry headwinds through implementing cost optimization efforts, including cuts to the company’s planned capital program and right-sizing its fleet network to help improve the free cash flow profile. While we expect some noise around margins in 2025 related to one-time costs (as the company looks to expand its operations internationally), we support the measures taken by management to enhance the company’s offering to drive growth against a challenging industry backdrop,” the analyst wrote.

Hassan thinks CJT will post Adjusted EBITDA of $361.3-million on $1.1-billion in fiscal 2025. He expects Adjusted EBITDA of $380.3-million on revenue of $1.14-billion in fiscal 2026.

“Cargojet shares have experienced a significant pullback over the past six months. We view the sell-off as overdone with the valuation becoming hard to ignore at these levels,” he argued. “While 2025 is expected to be a transition year of one-time costs and a turnaround in demand, we view the long-term set-up as supportive for Cargojet shares. We initiate coverage of Cargojet with a Buy recommendation and $150.00 target price, based on 8.5x our 2025 EBITDA estimate.”