TD preview: Bombardier our top pickBBD remains our top pick due its significant valuation discount to A&D comps, deleveraging opportunity, and the business jet outlook.
Bombardier (Top Pick): We forecast revenue of $1.47 billion (cons: $1.50 billion), flat y/ y, based on 14% delivery growth and 2% Service revenue growth, offset by mix shift towards Challengers. We estimate Adjusted EBITDA increases 2% to $216 million (cons: $225 million) and margins expand 10 bps due to delivery and aftermarket services growth, pricing, and other cost-saving initiatives, partially offset by cost inflation and mix shift. We forecast FCF usage of $245 million (cons: usage of $353 million), although we note a higherthan-usual risk to our forecast due to the requirements related to future Global delivery growth.
We do expect updated 2025 financial targets, anticipating any updates on BBD's Investor Day on May 1, when we believe the 2025 leverage target is the most likely (and potentially only) metric to be updated.
Target at 102$
Our target price is based on an 7.5x EV/EBITDA multiple applied to Adjusted EBITDA for Q1/25Q4/25, and net debt (including preferred shares, lease liabilities, and proceeds from assumed warrant exercises) as at Q4/24. Our target valuation multiple considers current and historical multiples for BBD and its group of comparable companies, BBD's higher financial leverage, significant recent financial progress, and improving revenue, margin and FCF stability and predictability.