Bombardier Inc. T.BBD.A

Alternate Symbol(s): T.BBD.B | T.BBD.PR.B | T.BBD.PR.C | T.BBD.PR.D | BDRPF | BOMBF | BDRXF | BDRAF | BDRBF

Industrials Aerospace & Defense

Bombardier Inc. is a Canada-based manufacturer of business aircraft with a global network of service centers. The Company is focused on designing, manufacturing and servicing business jets. The Company has a worldwide fleet of more than 5,000 aircraft in service with a variety of multinational corporations, charter and fractional ownership providers, governments and private individuals. It operates aerostructure, assembly and completion facilities in Canada, the United States and Mexico. Its robust customer support network services the Learjet, Challenger and Global families of aircraft, and includes facilities in strategic locations in the United States and Canada, as well as in the United Kingdom, Germany, France, Switzerland, Austria, the United Arab Emirates, Singapore, China and Australia. The Company's jets include Challenger 350, Challenger 3500, Challenger 650, Global 5500, Global 6500, Global 7500 and Global 8000.

TSX:BBD.A - Post by User

Bombardier Inc.

Bullboard Posts

Post by anon314on Mar 13, 2015 5:55am

240 Views

Post# 23517096

Summary of Canaccord Genuity Report 2015 Mar 12

Analyst: David Tyerman

CSeries plant tour and program update

BUY for margin expansion potential, new products

BBD remains attractive for strong growth potential from new products and improved operations. We believe these opportunities provide the potential for a triple in BBD’s share price by the end of the decade. Accordingly, we continue to recommend BUYing BBD shares.

CSeries plant tour and program update

Bombardier held an investor tour of its new CSeries assembly plant and the sister CRJA assembly plant in Mirabel, yesterday. Highlights from the tour are as follows:

CSeries testing is going well and certification is expected by the end of 2015. We think de-risking the CSeries program could be a positive catalyst (possibly on certification) and it moves the company toward CSeries cash flows (although the flows seem likely to be negative for some time).
CSeries operating performance is meeting or exceeding marketing goals. This could be an orders driver, which could be a positive catalyst. We think there is the potential for positive operating performance confirmation to drive orders at the Paris air show in mid-June 2015.
The CSeries plant is ready to go for production. The plant should help optimize production profit through effective layout and efficient manufacturing methods. However, the profit potential is likely to remain unclear for several years as the company moves through ramp up.

Overall, we see the CSeries moving from a period of mostly disappointments (i.e., delays, budget over-runs) to more positive news (certification and quite possibly, positive order flow), but the long, uncertain period to sustainable CSeries profit and cash flows may limit the upside for a considerable period of time.

Premium valuation reflecting growth potential

We value BBD at a premium multiple of 10.5x EV/NTM EBITDA in one year (10.5x Q4/15E EV to Q1/16E - Q4/16E EBITDA), reflecting BBD’s significant EPS growth potential. We increased our valuation multiple 1.5x as we are valuing on a trough earnings period. Our C$3.25 target is a discount to our C$3.69 DCF value.