RE:RE:Bombardier English translation
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Bombardier (BBD.B, $1.43): A more attractive stock
Scotiabank analysts hosted an investor meeting with Bombardier Senior Vice President and Chief Financial Officer Bart Demosky following the company's announcement to consolidate its shares at a ratio that will fluctuate between 10 for one and 30 for one.
"The main thing that came out of this meeting is that Bombardier is not reporting any headwinds related to Russia's invasion of Ukraine, supply chain issues or inflation," notes the analyst. Konark Gupta.
The latter believes that the company is in a good position to deliver on its short and long-term objectives. "We believe the consolidation will significantly reduce share price volatility and attract longer-term investors," he said.
The analyst anticipates that the consolidation ratio will be closer to 10 to one, given that two other companies in the sector, Air Canada and CAE, respectively have between 200 and 300 million and between 300 and 400 million shares outstanding.
“Bombardier is also in a good position to advance its long-term debt repayment plan by one year. After making a repayment of 3 billion dollars (B$) in 2021, the company paid an amount of 400 M$ in the first quarter of 2022, for a total decrease of 34% of its long-term debt of 10.1 B$ (at the end of fiscal year 2020)”, he notes.
Konark Gupta adds that the company has almost achieved its goal of reducing the cost of its Global 7500 devices by 20% between its fiftieth and its hundredth delivery, after reducing the manufacturing cost of the device by 40% before the fiftieth delivery. . Bombardier delivered its hundredth aircraft in March to its customer VistaJet.
The analyst maintains his “outperform” recommendation on the stock and his one-year target price of $2.35. He argues that investors should take advantage of the stock's recent price volatility to buy it, as he sees potential upside to $3.50 in two to three years regardless of future consolidation.