CAE (CAE) Stock Forecast & Price Target

CAE Inc. reported a year-over-year revenue increase of 4% to $728 million, primarily attributed to contributions from SIMCOM, airline operations digital solutions, and favorable foreign exchange impacts. The company also experienced a significant revenue increase of 29% year-over-year in its Civil Aviation segment, generating $547 million, exceeding expectations. Additionally, Civil operating income improved, achieving margins of 28.6%, surpassing the estimated 27.5%, driven by strong performance in business training services and a positive impact from the timing of R&D credits.

CAE Inc. has revised its fiscal 2025 revenue growth estimate down to 11% from 13%, coupled with a decrease in margin estimates to 8.1% from 8.3%, aligning with management’s guidance. This outlook has been negatively impacted by the Civil Aviation segment's performance, which was below expectations as management projected mid- to high-single-digit growth in adjusted operating income, falling short of the consensus estimate of 12%. Additionally, potential headwinds such as ongoing delays from original equipment manufacturers (OEMs) and challenges in pilot hiring further contribute to a pessimistic revenue outlook, reflected in a downside valuation scenario of $28.