Post by
Tempo1 on Apr 18, 2024 7:50am
RBC: Investor Day
Previewing Bombardier’s 2024 Investor Day
Our view:
We believe BBD at its upcoming Investor Day will highlight its
second phase of growth in Defense, CPO and Services, all of which we
believe provide avenues for meaningful growth out to 2030. We also expect
management to reiterate 2025 targets; and with FCF expected to exit 2025
north of $900MM we see management providing a capital allocation plan,
which could include growth capex (new or refreshed aircraft), tuck-in M&A,
and shareholder returns. We reiterate our Outperform rating and $95 price
target.
Key points:
Bombardier will host its 2024 Investor Day in person on May 1st, 2024 at
the new Global assembly plant at Pearson Airport in Toronto. We believe
the event will focus on near-term targets and longer-term opportunities in
Defense, CPO, and Services:
• Making it to the finish line. Management first issued its multi-year
plan in March 2021, which provided key targets for the company out to
2025. Since then, BBD has met or exceeded targets, and we anticipate
mgmt will reaffirm 2025 guidance at the event, namely an upcoming
FCF inflection in 2025. Key focus in our view will be on improvement in
the supply chain and the extent to which recent investments are driving
resiliency.
• So what's next? Defense, CPO, and Services set the stage post-2025.
We believe the company will highlight Defense, CPO, and Services
opportunities as its progress on 2025 production and financial targets
is on track. We believe the market is not appreciating these new
opportunities and believe management will speak toward a more
detailed outlook versus previous indications of $1B of opportunities
in each of Defense and CPO longer term. In addition, we believe the
company may increase or provide out year guidance for Services on the
back of an increasing fleet size and penetration growth.
• What to do with all that free cash? We are calling for FCF to
inflect meaningfully in 2025E to >$900MM. We believe the company
will provide a capital allocation game plan, which could include, 1)
investment into a new clean sheet or midsize upgrade/refresh for the
next stage of delivery growth, 2) return of capital to shareholders via
dividend and share buybacks, and 3) tuck-in M&A in what we think would
be in the aftermarket services space or a supplier.
Comment by
stock4life48 on Apr 18, 2024 11:14am
Which bank is this from? It looks like RBC