Desjardins Securities maintains C$143 target The negative stock reaction to Bombardier Inc.’s (
) second-quarter earnings this week is a buying opportunity for long-term investors, said Desjardins Securities analyst Benoit Poirier.
Shares fell nearly 5% on Thursday even as overall results were better than expected. as investors appeared disappointed the company didn’t raise guidance for the rest of this year. Total revenue came in at US$2.203 billion in the second quarter, above consensus of US$1.843 billion. Adjusted EBITDA was US$335 million, above consensus of US$291m and free cash flow was much better than Street estimates thanks to the company being also to deliver seven more planes than anticipated.
“While many investors were curious as to why the company did not raise guidance on the back of these results, we note that pull-forward dynamics are at play and that 3Q consensus for deliveries will have to fall. While we are not concerned about BBD’s ability to reach its 2024 targets, 4Q will once again drive the show—we forecast free cash flow of -US$77m in 3Q and US$783m in 4Q,” said Mr. Poirier. “Management remains confident that it can achieve an 18% EBITDA margin next year, driven by aftermarket growth, pricing tailwinds, an improvement in the Global mix and neutral working capital in 2025. Management stated the Toronto strike would not impact guidance as most of the jets that will be delivered this year are already in Montral being readied for completion, while the few remaining in Toronto are returning to schedule with overtime work. Overall, BBD maintained and reiterated its confidence in its 2024 guidance, mentioning that things are going according to plan.”
He added: “We remain quite pleased with the results overall and the strong execution. We believe the market does not fully appreciate BBD’s booking 39 jet orders in a seasonably weaker quarter and being the only original equipment manufacturer to beat consensus deliveries.”
Mr. Poirier maintained a “buy” rating as well as a C$143 price target. At least one analyst did raise their price target, however: CIBC increased its to C$116 from C$102.
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