Cargojet (TSE: CJT), a Canadian airline specializing in scheduled cargo flights, announced Monday it is renewing and extending its Air Cargo Services Agreement with two major domestic customers.
The agreements will have a term of three years and will include two one-year renewal options.
Cargojet will continue to be the exclusive provider of overnight air cargo services in Canada to these customers. The total revenues represented by these contract renewals are estimated at more than C$150 million during the term of the new agreements, including extension options.
Structural changes in the nature of supply chains are resulting in significant growth in the demand for urgent air cargo services across Canada.
CEO Commentary
Cargojet president and CEO Dr. Ajay Virmani said, “Cargojet is extremely pleased to have been successful in extending the exclusive domestic air cargo service agreements with two strong Canadian logistics providers. The confidence that our customers place in Cargojet is a testament to the high level of reliability and cost-effective air cargo services that we have consistently provided over the past twenty years. We will continue to work closely with all of our customers to provide the most flexible; the most reliable and the most scalable air cargo network in Canada.”
Wall Street’s Take
Two months ago, National Bank analyst Cameron Doerksen kept a Hold rating on CJT, while lowering its price target to C$201 (from C$205). This implies 27.3% upside potential.
The rest of the Street is bullish on CJT with a Strong Buy analyst consensus rating based on six Buys and one Hold. The average Cargojet price target of C$249.33 implies 57.9% upside potential to current levels.
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