Air Canada (TSX:AC) shares have seen modest movement this week, drawing investor attention despite the absence of major news or announcements. As the broader aviation sector remains under watch, many are curious about where the stock heads next.

See our latest analysis for Air Canada.

Air Canada’s share price has bounced around this year, with the recent 7-day gain of 3.02% offering a brief reprieve from deeper, long-term declines. Although the share price is showing mild upward momentum in the short term, total shareholder return is still down 2.64% over the past year, which suggests the path to recovery remains uncertain for now.

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With Air Canada still trading well below analyst price targets, despite signs of operational recovery, investors are left wondering if the current share price is a bargain or if expectations for future growth are already reflected in the market.

With Air Canada closing at CA$18.42, the most widely followed narrative pins its fair value at CA$24.36. This notable gap suggests the company is trading well below what consensus expects. This sets the stage for a closer look at what’s driving that optimistic outlook.

Aggressive international long-haul network expansion, notably into Latin America, Europe, and Southeast Asia, alongside successful development of sixth freedom traffic, positions Air Canada to capture a larger share of connecting global passengers, supporting both top-line growth and load factor resilience.

Read the complete narrative.

Want to know why analysts are betting big on future revenue? There’s a bold growth story hidden behind the ongoing earnings squeeze. One key assumption could surprise even seasoned investors. Find out which ambitious projections underpin this fair value target.

Result: Fair Value of $24.36 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising labor costs and intensifying competition on key international routes remain significant risks that could undermine the bullish case for Air Canada.

Find out about the key risks to this Air Canada narrative.

If you have a different perspective or prefer hands-on analysis, you can dive in and craft your own Air Canada story in just a matter of minutes, Do it your way

A great starting point for your Air Canada research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include AC.TO.

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