RBC: Q3 preview
• BBD:
Q3 estimate unchanged and slightly below consensus; price target maintained at $133; reaffirm Outperform rating.
Our Q3/24 EBITDA estimate is unchanged at $271MM, below consensus of $279MM. Our 2024 EBITDA estimate is also unchanged at $1,344MM, a touch below consensus $1,351MM, and in line with guidance of $1.30B -$1.35B. Our 2024 FCF estimate of $250MM is unchanged and at the midpoint of management’s guidance of $100MM-$400MM.
Our 2025 EBITDA and FCF estimates of $1,680 and $952MM, respectively, remain unchanged and in line with the company's 2025 targets for EBITDA of >$1,625MM and FCF of >$900MM. Our target multiple moves to 7.1x (from 8x) as we shift our valuation year to 2026, resulting in our unchanged price target of $133.
We continue to flag Bombardier as our top idea reflecting a double-digit FCF yield on our 2026 estimates and the opportunity to compound FCF at a double-digit CAGR out to 2030, which we see as underappreciated at current levels
Bizjets indicators:
Slight y/y declines off highs, fleet operators showing strong growth.
According to WingX, year to date global bizjet activity is 1% below last year, 30% ahead of 2019, though weakness was noted in September primarily in the smaller jet segment. Additionally, both number of flights and hours are up for fractional ownership ~+10% y/y and above 60% since 2019, which we see as a tailwind for Bombardier’s fleet sales and aftermarket revenues.
Total bizjet traffic in the US was down -0.6% y/y through August (+1.9% domestic; -14.8% international) and up 10% vs 2019, indicating structurally higher demand for private travel. In addition, global transponder data shows bizjet activity down -1.9% in Q3 y/y, with Bombardier jet activity -1.8% below that of Gulfstream +1.3%. As of last quarter, used inventory sits at 7.3%, well below the normal range of 11-14%. Taken together, the data points to robust demand trends which we see supporting Bombardier and CAE (with respect to business aviation pilot training).
RBC estimates for Q3
27 jets
Revenues : 1751 M$
Margin : 15,5%
EBITDA: 271 M$
FCF: - 52 M$