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CAE Q4 Profit Drops 77% on Weaker Aviation Demand; Shares Plunge 8%

Shares of CAE Inc (CAE) fell more than 8% in early trading Wednesday after the company reported weaker profit and revenue in Q4 2021 and FY 2021. The Montreal-based aviation training specialist experienced lower demand for its pilot drills and full-flight simulators (FFS) due to the COVID-19 pandemic.

Net income fell to C$18.8 million (C$0.07 per share) in the fourth quarter from C$81.1 million (C$0.29 per share) in the prior-year quarter. Meanwhile, Q4 revenue decreased 8.5% to C$894.3 million from C$977.3 million the year before.

For Fiscal Year 2021, CAE posted a net loss of C$47.5 million, compared to a net income of C$318.9 million in FY 2021. Revenue fell 18% to C$3 billion from C$3.6 billion last year.

CAE delivered 14 FFS in the fourth quarter and 36 FFS in FY 2021. This is a decline compared to 21 FFS deliveries in Q4 2020 and 56 FFS deliveries in FY 2020.

CAE’s President and CEO Marc Parent said, “In the face of the biggest-ever shock in the history of civil aviation and major disruptions across the defence and healthcare markets, CAE rebounded to quarterly profitability and positive free cash flow after only our first quarter. Our recovery momentum has continued into the fourth quarter with average training network utilization of 55% and sequentially higher margins in Civil, order bookings to sales breaking above 1.1x in Defence, and record quarterly revenue in Healthcare. For CAE overall, we generated $0.22 adjusted EPS in the quarter and $0.47 adjusted EPS for the year. We also generated strong annual free cash flow of $347 million, serving as a testament to CAE’s resiliency as a good port in a storm.”

During the quarter, CAE bought the military training division of L3Harris Technologies to expand its defense activities in the critical U.S. market. (See CAE Inc stock analysis on TipRanks)

On April 26, CIBC analyst Kevin Chiang reiterated a Buy rating on CAE while raising its price target to C$44.00 (from C$42.00), for 30% upside potential.

The rest of the Street is cautiously optimistic on CAE with a Moderate Buy rating based on 4 Buys and 3 Holds. The average analyst price target of C$42.00 implies 24% upside potential from current levels. Shares are flat year-to-date.

TipRanks’ Smart Score

CAE scores an 8 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock’s returns are likely to outperform the overall market.

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