Stifel GMP on Thursday maintained its buy rating on the shares of Air Canada (AC.TO) while cutting its price target to C$22.00 from C$26.00 ahead of the airline's first-quarter results on weakening demand for travel.

"We are reducing our estimates in advance of AC's Q1/25 results pre-market May 9th, and lowering our target price, reflecting a more conservative outlook for travel demand amid the current geopolitical uncertainty and growing recession risks. Additionally, Q1/25 will be impacted by severe weather and disruption at Pearson Airport, from Delta's overturned aircraft. There are clear indications of weakening U.S. Transborder demand but re-book of Domestic and Other International appears to be offsetting. On the positive side, the stronger C$ and falling fuel prices are supportive of cash flow generation, and will partially mitigate the demand uncertainties. In our view, these factors are well-understood and based on our investor conversations we think it's largely consensus that AC will cut (or pull) its full-year 2025 guidance alongside Q1/25 results. However, at the current valuation the stock is arguably already pricing in significant downside, potentially setting up for a "better-than-feared" dynamic," analyst Daryl Young wrote.

(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)