UBS raised its price target on WestJet Airlines Inc. to $21 from $20, while Versant Partners flew Air Canada to $15 from $13, even though it contends the "better investment play" is WestJet on "stronger margins and a more compelling growth profile." Fadi Chamoun at UBS figures that WestJet's valuation looks attractive at a price/earnings multiple of 13.4 times and 6.2 times enterprise value-to-earnings before interest, taxes, depreciation, amortization and rent based on 2008 projections. Those numbers are at the low end of the company's historical trading range and at a discount to global peers like Southwest Airlines, Ryanair and EasyJet, he points out. Versant's Cameron Doerksen kept Air Canada at "hold" and reminded investors that the carrier faces "more intense competition" domestically and on trans-border routes from WestJet and, to a lesser degree, Porter; looming labour contract talks in two years; and uncertainty over ACE Aviation Holdings Inc.'s stake in Air Canada. WestJet closed at $17.67 and Air Canada at $14.32 on the TSX Wednesday.
WestJet and Air Canada targets take off
Globe and Mail Blog Post
Last updated Thursday, Apr. 09 2009, 8:55 PM EDT