CAE's (CAE) fiscal Q1 results increased "confidence" in the company's "transformation plan," with all eight workstreams on track, "order momentum accelerating" and free cash flow improving, RBC Capital Markets said in a report Monday.

"Customer attrition" tied to network rationalization is running below 1% of Civil revenue, which the firm called the quarter's "most important de-risking data point." Civil utilization improved to 72.2% from 68.8%, while "order intake" rose 64% year over year, the report said.

The firm said near-term Civil margin weakness appears "transitory" and sees a path to margin recovery as "transformation savings" begin to flow through. Defense is also becoming a larger growth driver, supported by a CA$10.7 billion ($7.72 billion) backlog and an additional pipeline of more than CA$5 billion.

RBC raised its fiscal 2027 earnings per share estimate to CA$1.27 from CA$1.21 and its fiscal 2030 estimate to CA$2.16 from CA$2.12, according to the report.

The firm upgraded CAE to outperform from sector perform and raised its price target to CA$46 from CA$36.

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