We know already, but a positive look for Bombardier.
* Bombardier Inc. (BBD.B-T, “sector outperform”) to $90 from $85. Average: $78.
Analyst: “BBD is one of our top picks this year. We believe the stock’s significant discount to history and peers is reflecting investors’ key concerns about the bizjet cycle (flying activity, book:bill ratio and pre-owned inventory), the company’s potentially looming product reinvestment cycle, and the return of material FCF seasonality quarter over quarter. In addition, we think some traditional investors remain on the sidelines due to BBD’s rocky past when the company had a more stretched balance sheet while struggling with underperforming assets like CSeries and train division (sold over the years heading into the pandemic). We understand the cycle concern, however, the bizjet industry is not as sensitive to macro as commercial aviation, while BBD is no longer in the relatively more macro-sensitive segment (smaller bizjets). Further, OEMs have built a solid backlog over the past three years, production rates are constrained by industry supply chain issues (e.g., engine suppliers), pricing remains firm, and order cancellation risk is much lower in this cycle due to more stringent penalty terms.”