Is Cargojet (TSX:CJT) a Buy in 2026 Amid Strategic Shifts and Analyst Revisions?

Cargojet Inc. (TSX:CJT) has long been a focal point for investors seeking exposure to the air cargo sector, but 2026 presents a pivotal inflection point. With strategic shifts, analyst revisions, and valuation dynamics in flux, the question of whether Cargojet is a compelling buy hinges on its ability to balance short-term headwinds with long-term momentum. This analysis evaluates the company's trajectory through the lens of value re-rating potential and strategic execution.

Strategic Momentum: Expanding Horizons and Partnership Stability

Cargojet's 2025 strategic initiatives laid the groundwork for 2026's momentum. The launch of a direct weekly air cargo route connecting Canada to Belgium's Liege Airport marked a significant step in global expansion, enhancing its ability to serve European markets while integrating overnight domestic operations. This move aligns with broader e-commerce tailwinds, as cross-border logistics demand continues to rise.

Equally critical is the renewed long-term partnership with DHL, extended until 2033 with a revenue target of up to C$3.2 billion. This agreement not only ensures stable block hours but also provides Cargojet with opportunities to access new global routes-a strategic advantage in an industry where network reach is paramount. Complementing these efforts, the leadership transition to Pauline Dhillon as CEO in January 2026 signals a focus on international growth, particularly in Europe and Asia.

Analyst Revisions: Caution Amid Optimism

Despite these strategic strides, 2026 has seen a recalibration of analyst expectations. The consensus price target for Cargojet dropped to CA$109.21 from CA$120.50, reflecting concerns over near-term profitability and macroeconomic headwinds. Earnings per share (EPS) forecasts were slashed by 37% to CA$5.22, while revenue projections fell to CA$998.1 million from CA$1.07 billion. These revisions underscore skepticism about the company's ability to navigate rising labor costs and global trade disruptions.

However, not all analysts share this bearish view. Beacon Securities' Donangelo Volpe maintains a "Buy" rating with a CA$155.00 price target, citing Cargojet's operational discipline and the stability of its DHL and Amazon contracts. This divergence highlights the tension between short-term challenges and long-term strategic value.

Valuation Metrics: Undervaluation or Overcorrection?

Cargojet's valuation appears to reflect a discount to its intrinsic potential. The stock trades at a Price-to-Earnings (P/E) ratio of 7.2x, significantly below industry benchmarks, while analyst fair value estimates hover around CA$144.83-a 33% premium to its current price. This gap suggests a potential re-rating if the company meets or exceeds revised expectations.

Yet, margin pressures remain a concern. Analysts project a decline in net profit margins from 14.2% to 9.7% over three years, driven by operational costs and customer concentration risks. While the DHL partnership provides multi-year revenue visibility, over-reliance on a single client could amplify volatility if contract terms shift.

Industry Trends: E-Commerce Tailwinds and Competitive Dynamics

The air cargo sector is poised to benefit from e-commerce growth, with Cargojet's Liege route positioning it to capture cross-border logistics demand. However, competition from low-cost carriers and ACMI (Aircraft, Crew, Maintenance, and Insurance) operators could erode margins unless the company differentiates through speed and reliability. According to earnings call analysis, this dynamic presents significant competitive challenges.

Cargojet's strategic focus on international expansion and contract renewals aligns with these trends, but execution risks persist. For instance, the recent share buyback plan and debt redemption (using $117 million from its credit facility) demonstrate financial prudence, yet liquidity constraints could limit flexibility during downturns.

Conclusion: A Calculated Buy?

Cargojet's 2026 investment case rests on its ability to convert strategic momentum into tangible financial performance. While analyst revisions highlight near-term risks, the company's global expansion, long-term partnerships, and undervaluation suggest a compelling risk-reward profile. Investors willing to tolerate short-term volatility may find value in Cargojet's potential to re-rate as it executes its international growth strategy and navigates macroeconomic challenges.

However, prudence is warranted. The stock's performance will likely hinge on Cargojet's ability to diversify revenue streams, manage margin pressures, and deliver on its 2028 revenue and earnings targets of CA$1.1 billion and CA$111.6 million, respectively. For those with a medium-term horizon and a tolerance for sector-specific risks, Cargojet could emerge as a buy-provided its strategic initiatives translate into operational and financial resilience.