“Notwithstanding the 25% pullback of Air Canada shares since the IPO and that expectations have become more attainable, we don’t see any reason yet to get excited about the stock,” Mr. Chamoun wrote in a note Wednesday.
He reduced his 2007 EPS estimate by 8% to C$1.34 from C$1.45, and reduced his 2008 EPS by 5% to C$1.56 from C$1.65.
However, Mr. Chamoun said the airline’s parent company, ACE Aviation Holdings Inc., [ACEa/TSX] holds more promise for investors.
“ACE shares are trading at 21% below our projected sum-of-the-parts value of approximately $33,” Mr. Chamoun said. “[There are] several near-term catalysts that should result in the elimination of the discount including further dividend distributions and ultimately a complete winding down of ACE Aviation in the next 12 months.”