Bombardier Inc. T.BBD.A

TD: Q4 Aerospace preview

[lb1temporary]

While Bombardier's share price strength has resulted in a return to our target that falls below the threshold for a SPECULATIVE BUY recommendation, we believe that it is prudent to analyze Q4/22 results before considering any changes to our recommendation. This decision is supported by the fact that our current forecasts combined with rolling forward our current valuation period by one quarter (which we will do when Q4/22 is reported) implies an equity value of C$84.00, a level that continues to support our current recommendation


Bombardier: The company pre-released its preliminary 2022 results on January 17. In Q4/22, the company expects approximately $2.6 billion of revenue, $352 million of Adjusted EBITDA, $209 million of Adjusted EBIT, FCF of $169 million, and a unit book-to-bill of 0.7x-0.8x. Our estimates are in-line with the implied Q4/22 preliminary results. Although the extreme undervaluation of 2022 has largely corrected, we still view the current share price and valuation as leaving attractive risk-adjusted upside potential for investors over a 12-month investment horizon.


Our target price is based on an 8.0x EV/EBITDA multiple applied to consolidated Adjusted EBITDA for the Q4/23Q3/24 period, and net debt (including preferred shares, lease liabilities, and proceeds from assumed warrant exercises) as at Q3/23

Our SPECULATIVE risk rating reflects Bombardier’s elevated share-price volatility; high balance-sheet leverage; visibility on FCF; and business aircraft demand risk. Key risks to our target price include the following: limited revenue diversification; prolonged work stoppages/strikes; share-price volatility; input cost inflation; strength or appreciation of the Canadian dollar; competition; unusual effects on consumer confidence in travel; the successful execution of restructuring initiatives; high financial leverage; cost overruns on major projects; and subordinate voting share structure (Bombardier/Beaudoin/Fontaine family controls approximately 53% of votes)

Note: The TD's forecasts for 2025 is an EBITDA of 1504 M$ and a net income of 467 M$

[Finbarr]

that's a fair amount of words to say "buy"

[MyNameIsNobody]

Thanks lb1, this validates what we're seeing lately, nice run up but fundamentals are still supporting this. The trend is our friend for now.  Very nice to just have the options of keeping our shares or leaving with nice gains instead of keeping our shares or crytalizing our losses. GLTA

[PabloLafortune]

TD is the best Canadian bank now IMO (I've dealt with all of them) and they didnt get there by being loose cannons. This analysis reflects that.