01:21 PM EDT, 04/09/2024 (MT Newswires) -- The Canadian government announced new overall investment of $8.1 billion over five years in defence spending. RBC sees CAE's Defense segment as well-positioned to capitalize on these new programs and views the announcement as a positive.

"Key is we see the increased Canadian defence spending to a projected 1.76% of GDP (from 1.38%), as a long-term tailwind to CAE's Defense business as near-peer threats continue to be top of mind. Additionally, we believe CAE, with its digital solutions, may benefit from plans by the Canadian government to modernize and streamline training," writes RBC analyst James McGarragle.

He continues to expect sentiment in CAE to be driven by Defense margins, but nevertheless views a stable demand backdrop as supportive to margin improvement longer-term.

CAE is rated Outperform, with a target of $34, at RBC.

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