Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Goldman cuts price target on Bombardier; sees further CSeries delay

Published 09/02/2014, 08:22 AM
Updated 09/02/2014, 08:30 AM
Goldman cuts price target on Bombardier; sees further CSeries delay

Goldman cuts price target on Bombardier; sees further CSeries delay

TORONTO (Reuters) - Goldman Sachs cut its price target on Bombardier Inc (TO:BBDb) (PK:BDRBF) and reiterated a "sell" rating on shares of the train and plane maker on Tuesday, warning it expected the CSeries aircraft's entry into service to be delayed again.

Goldman's price cut came just days after a Swedish carrier backed out as the first customer to start commercial flights with its new CSeries jet.

Malmo Aviation, owned by Sweden's Braathens Aviation, was slated to be the first CSeries customer to take delivery of the new jet in the second half of 2015, but the airline said on Friday that will no longer be the case. It cited worries about further delays after a May engine failure grounded the jets.

"We believe the CSeries will negatively impact Bombardier's financial results and create negative catalysts for the next

several years," Goldman analyst Noah Poponak said in a note to clients.

Poponak reiterated the "sell" rating and trimmed his price target to C$3 from C$3.20.

The CSeries aircraft, which will compete with Boeing Co's (N:BA) 737 MAX as well as the Airbus (PA:AIR) A320neo, has been grounded for more than three months. Bombardier, following an initial test flight in September 2013, had earmarked roughly two years for testing after a delay in the development process.

Poponak said the aircraft has completed just 330 hours of flight testing since its first flight, out of a planned 2,400 total hours, meaning Bombardier has achieved less than 15 percent of planned flight test hours, while using nearly half of the time it had allotted toward testing.

He contended if flight tests resumed in September, Bombardier would need to complete an average of about 160 test flight hours per month to achieve the currently planned second half of 2015 entry into service.

"We see that as very unlikely given the pace achieved before grounding, momentum (not just time) lost during grounding, and

the high risk of new problems occurring other than this engine incident," said Poponak.

Shares in Bombardier closed more than 3 percent lower at C$3.66 on Friday on the Toronto Stock Exchange after the Swedish carrier said it was backing out.

(Reporting by Euan Rocha; Editing by Jeffrey Benkoe)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.