Scotiabank Scotiabank (sue me)
Latest Research (January 27, 2020):
OUR TAKE: Potentially Positive. The debate has recently picked up whether BBD would sell the Aviation segment (BA) or Transportation (BT). We think everything is on the table but BT could be attractive to more parties and more types of buyers despite execution issues, while BA may have relatively fewer options due to its cyclical nature. Given BBD is likely to announce one or more strategic actions on Feb. 13, we don't intend to stretch the existing debate and are rather evaluating valuation scenarios in this note. Our simple analysis suggests a wide valuation range of C$1.22 to C$3.14 per share, depending on which segment is sold, which segment trades publicly, and segment valuations. In our base case, we see ~C$2/sh as reasonable, assuming BT is sold for US$5.0B and the remaining assets trade at 9.0x forward EBITDA, although reality could be more complicated. We are moving our target price to C$2 from C$2.25 to be in-line with our updated base case and to reflect our bias toward BT's sale. We maintain SO rating with Speculative risk given potential for upside in an asset sale scenario and a wide range of outcomes.
Although, they\ve been wrong for 1.5 years!