12:56 PM EDT, 05/22/2024 (MT Newswires) -- CAE's Defense segment recorded $568 million in goodwill impairment, $90.3 million unfavourable contract adjustments, and $35.7 million impairment of related intangible assets. The company also appointed Nick Leontidis, formerly Group President, Civil Aviation to the new position of COO and noted board approval of a NCIB to repurchase up to 5% of its common shares.

Commenting on the non-cash goodwill impairment, RBC analyst James MacGaragle notes the size of the adjustments at ~8% of CAE's market cap is significant. "We see the write-down as further contributing to uncertainty surrounding the outlook and do not expect the announcement to be well-received." The company also pre-released Q4 results, with adjusted EPS (excluding Legacy Contracts) of $0.37 coming in below consensus $0.42.

The announcement of Nick Leontidis to COO to oversee both of CAE's business segments is a positive, RBC said. "We hold Mr. Leontidis in high regard and point to his impressive track record leading the Civil segment. However, we expect current uncertainty related to the Defense operating outlook to persist until margin improvement is demonstrated in CAE's results over the coming quarters."

CAE is rated Outperform, with a $34 target.

Price: 25.03, Change: -2.03, Percent Change: -7.50