Last Update 09 Jan 26

Fair value Decreased 0.46%

CJT: European Expansion And Buybacks Will Support Future Upside Potential

Cargojet's updated fair value estimate has edged down by about C$0.50 to C$108.71 as analysts trim growth and valuation inputs in line with recent price target cuts to C$105 and C$120, while still maintaining positive stock ratings.

Analyst Commentary

Recent research updates show that while price targets for Cargojet have been reduced, analysts are still keeping constructive ratings on the shares. This reflects a mix of optimism and caution around growth, execution, and valuation.

Bullish Takeaways

Bullish analysts are maintaining positive ratings even after revising their targets to C$105 and C$120, which signals ongoing confidence in Cargojet's core business model and ability to execute.
The updated targets, although lower than prior C$135 and C$130 levels, remain above the latest fair value estimate of C$108.71, suggesting room for upside in their view if Cargojet meets expectations.
Retaining Outperform and Buy calls indicates that bullish analysts still see Cargojet as relatively attractive compared with alternatives, assuming the company can deliver on its operating and growth plans.
The tighter range of targets around C$105 to C$120 may also reflect increased clarity around assumptions. This can help investors better frame potential risk and reward.

Bearish Takeaways

Bearish analysts are trimming targets from C$135 and C$130 down to C$105 and C$120, which points to more conservative expectations around growth or valuation multiples than before.
The cuts in targets indicate that some prior assumptions on Cargojet's future performance may have been too optimistic, leading to a reset in what analysts consider a reasonable price range.
The gap between the higher historical targets and the new levels highlights the risk that execution or market conditions could limit upside versus earlier expectations.
With targets now closer to the fair value estimate of C$108.71, bearish analysts may see less margin of safety for investors who are sensitive to downside risk if Cargojet underperforms analyst assumptions.

What's in the News

Cargojet announced a new normal course issuer bid that allows the company to repurchase up to 1,400,000 common voting shares, or 9.28% of shares outstanding. Any repurchased shares are to be cancelled and the program will run until November 10, 2026 (share count reference date November 6, 2025).
The Board of Directors authorized the new buyback plan on November 7, 2025, which signals active capital management through share repurchases.
From July 1, 2025 to September 30, 2025, Cargojet reported no additional share repurchases under the prior program. The company had completed the repurchase of 704,533 shares, or 4.51%, for C$73 million under the buyback announced on November 4, 2024.
Cargojet announced that Pauline Dhillon will become Chief Executive Officer effective January 1, 2026, following a 24 year career with the company in senior roles including Co CEO and Chief Corporate Officer.
Co CEO and founding member Jamie B. Porteous plans to retire from his executive role effective December 31, 2025, and will continue as Strategic Advisor until December 31, 2026 to support the leadership transition.
The company introduced a scheduled direct air cargo service connecting Canada with Europe, linking major Canadian cargo hubs with Liege Airport from November 1, 2025, on an initial once weekly schedule, with scope for higher frequency if demand supports it.

Valuation Changes

Fair Value Estimate edged down slightly from CA$109.21 to CA$108.71, reflecting a small adjustment in the model.
Discount Rate moved up marginally from 8.01% to about 8.04%, implying a slightly higher required return in the analysis.
Revenue Growth eased a bit from about 2.05% to roughly 2.02%, indicating more conservative top line assumptions.
Net Profit Margin ticked up fractionally from about 5.96% to around 5.96%, suggesting a very small improvement in projected profitability.
Future P/E shifted slightly lower from about 28.22x to roughly 28.11x, pointing to a modestly lower valuation multiple in the model.

Renewed long-term partnerships and strong domestic e-commerce growth drive higher revenue stability and earnings predictability.
Network expansion and fleet modernization boost operational efficiency, margin improvement, and diversified global revenue streams.
Heavy reliance on key customers, rising costs, operational declines, and global uncertainties threaten revenue stability, margin resilience, and long-term international growth prospects.

Catalysts

About Cargojet

Provides time-sensitive overnight air cargo services and carries in Canada.What are the underlying business or industry changes driving this perspective?

Renewal and extension of long-term contracts with major partners Amazon (to potentially 2031) and DHL (to potentially 2037, with growth-oriented incentives) enhance future revenue visibility and position Cargojet to benefit further as these global customers expand, potentially supporting multi-year top line growth and greater earnings predictability.
Sustained and accelerating domestic e-commerce demand-evidenced by 14% year-over-year domestic revenue growth and strong results during major events like Amazon Prime Week-points to ongoing volume expansion and improved capacity utilization, directly benefiting revenue and EBITDA margins.
The company's dominant overnight air network in Canada and an expanding international footprint, including China-scheduled charters and growth agreements with DHL, position Cargojet to capitalize on shifting global trade patterns and new route opportunities, diversifying and potentially increasing revenue streams over the long term.
Fleet modernization and harmonization efforts (selling older, less efficient aircraft and integrating more standardized models) are expected to reduce maintenance costs, improve operational reliability, and optimize asset utilization, supporting higher net margins and return on invested capital in future periods.
Implementation of operational efficiency and technology initiatives ("work smarter" culture, new technology transformation project, and optimized sales/backhaul strategies) are already driving higher adjusted EBITDA margins and are likely to further enhance cost discipline and working capital efficiency, with positive impacts on future net margins and earnings.

Cargojet Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Cargojet's revenue will grow by 3.7% annually over the next 3 years.
Analysts assume that profit margins will shrink from 14.2% today to 9.7% in 3 years time.
Analysts expect earnings to reach CA$111.6 million (and earnings per share of CA$8.49) by about September 2028, down from CA$145.7 million today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as CA$152 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 19.4x on those 2028 earnings, up from 10.3x today. This future PE is greater than the current PE for the CA Logistics industry at 10.3x.
Analysts expect the number of shares outstanding to decline by 4.88% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.51%, as per the Simply Wall St company report.

Cargojet Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Cargojet remains highly dependent on a small number of major customers, especially Amazon and DHL; a loss, renegotiation at less favorable terms, or reduced volumes from these key contracts would materially impact revenue stability and earnings.
Large capital expenditures required to modernize and rationalize the fleet, along with ongoing investments in technology and training, continue to pressure free cash flow and could limit the company's ability to return capital to shareholders.
Block hours (a key operational metric) have seen double-digit year-over-year declines, with management commenting on global uncertainties, trade realignment, and softness in certain international routes like Europe and China; persistent weakness or further volatility in these trade lanes would weigh on top-line growth and asset utilization rates.
Rising industry-wide labor costs and potential chronic labor shortages, noted with previously "ramped-up" pilot hiring and training costs, could lead to higher operating expenses and margin compression, especially if labor markets remain tight in aviation and logistics.
The company acknowledges macroeconomic headwinds such as global trade uncertainty, shifting trade policies, and possible changes in consumer spending; these factors introduce sustained risk to long-term international revenue growth and could further increase earnings volatility.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of CA$144.833 for Cargojet based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$170.0, and the most bearish reporting a price target of just CA$98.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be CA$1.1 billion, earnings will come to CA$111.6 million, and it would be trading on a PE ratio of 19.4x, assuming you use a discount rate of 7.5%.
Given the current share price of CA$99.65, the analyst price target of CA$144.83 is 31.2% higher. Despite analysts expecting the underlying buisness to decline, they seem to believe it's more valuable than what the market thinks.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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