CAE (CAE) Stock Forecast & Price Target

CAE Inc. reported a substantial 21% year-over-year revenue increase to $753 million, driven primarily by higher simulator sales, featuring increased deliveries and contributions from SIMCOM and foreign exchange impacts. Projections for fiscal year 2025 indicate revenue growth has been raised to 6.6%, with an anticipated margin enhancement to 7.1%, consistent with management's guidance and reflective of strong civil operating income. The recent improvements in Defense margins and adjustments in target multiples for both Defense and Civil segments underscore CAE's solid execution and robust backlog, positioning the company favorably for future growth.

CAE Inc. has revised its growth outlook for adjusted operating income from the previously anticipated 10% annual growth to slightly below that level, largely due to ongoing delays from original equipment manufacturers (OEMs). This adjustment reflects a potential revenue decline of 10% below current estimates for fiscal year 2027, compounded by challenges in pilot hiring and limited progress on the restructuring program due to top-line pressures. Furthermore, while the Civil segment's valuation multiple aligns with peers in the Aerospace and Defense sector, the Defense segment is valued at a discount due to facing lower margins and recent operational headwinds, contributing to a negative outlook on the company's overall stock performance.