| 02:33 PM EDT, 09/17/2018 (MT Newswires) -- Credit Suisse says with the stock lagging (down near 17% from its recent peak in July), it spent time with management in London, Zurich and Frankfurt last week, as CS thinks "the market has lost sight of both the value and growth opportunity in this name." Valuation: CS sees value of C$7.00 based on 2020 alone, and said growing out-year FCF offers further upside. Looking at the midpoint of the 2020 FCF target range, or $875 million, the shares today are trading at a near 9.5% yield, it noted. Credit Suisse said if this were peak, it might understand why the shares should stall here as they have. But with growth beyond, it thinks a 6-7% yield is more appropriate. Assuming no major macro collapse, CS sees positive trends across the businesses and within the capital structure after 2020: - CSALP should see higher A220 production, firmer pricing, and declining costs starting in 2021, if not in 2020. - Transportation topline continues to grow, with potential further margin expansion from mix and continued efficiencies. - Bizjet will have ended its development cycle, and should see ramping volumes on 7500 and firmer pricing and margins on the two models (5500 and 6500) replacing today's 5000 and 6000 (which are heavily discounted). - Higher aftermarket/services sales will also be key drivers of the upward momentum. - Aerostructures will likely pick up more third party work, potentially with Airbus if the A220 experience goes smoothly. Meanwhile, CS said EBITDA should rise, reducing leverage and enabling further refinancing. Management believes that it can reduce annual interest expense by $150 million to $200 million. Adding a potential contribution from CSALP of perhaps $150 million to $200 million (if A220 production gets above 100 units per year and margins rise to mid-single digits), BBD could see an incremental $300 million to $400 million in FCF, which could offer another US$4B+ in market value. Price: 4.57, Change: -0.08, Percent Change: -1.62 |