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Analyst Actions: CAE Downgraded at Desjardins

CAE Inc., the world's largest producer of full-flight simulators and training services, was downgraded to a Hold Thursday by Benoit Poirier, Desjardins Securities analyst, on concerns over uncertainty in its military business and its rich valuation, the Financial Post reported.

It said the manufacturer delivered a second quarter result this week that was up 19% year-over-year on the back of an upturn in the civil aviation sector.

But, it added, management warned of slower-than-expected sales growth in its military business after a series of order delays, primarily in Europe, as government determine their spending priorities.

Poirier downgraded the stock from a Buy to a Hold accordingly, and lowering his price target to $14 a share, from $16 previously.

"Despite the potential return of 21%, we are downgrading the stock to a hold," he reportedly said. "[We] believe that increasing uncertainty on the military side and rich valuations will impede stock price appreciation in the medium term."

He reportedly said he still likes CAE's market share leadership, and encouraged investors to buy the stock on any weakness.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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