Rbc: GD results meaning for BBDConnecting the Dots: BBD flash read-through – GD’s Q2 Results
TSX: BBD.B | CAD 60.90 | Outperform | Price Target CAD 103.00
Sentiment: Positive
Our take:
We see the read-through for Bombardier as positive following General Dynamics’ Q2 release this morning. Key is that the Aerospace segment was strong with $2.5B in new orders and sales up 4.6% on strong demand for bizjets. Book to bill was solid at 1.3x (which had been a risk factor for the sector and a notably positive read-through for BBD). GD delivered 24 aircraft (18 largecabin and 6 medium-cabin), up from 22 in Q2/22, although margins were impacted by R&D and elevated operating costs. Key is that, as the G700/800 certification remain uncertain, we see Bombardier continuing to capitalize on a less crowded operating environment.
What happened?
General Dynamics posted Q2 results above expectations with EPS of $2.70 compared to consensus of $2.56, driven by solid defense demand. Aerospace revenue was up 4.6% Y/Y, and backlog was stable at $19.5B, up 3.8% Y/Y. Aerospace book-to-bill was 1.3x for the quarter, down from 1.96x in Q2/2022. For more details, see RBC Capital Markets Analyst Ken Herbert’s note.