On Thursday, BMO Capital Markets adjusted its outlook on Bombardier (OTC:BDRBF) shares, reducing the price target to Cdn$130.00 from the previous Cdn$135.00 while still maintaining an Outperform rating on the stock. According to InvestingPro analysis, Bombardier appears undervalued at current levels, with 4 analysts recently revising their earnings expectations upward.
The firm highlighted Bombardier’s consistent track record of delivering results that meet or exceed its plans. Despite challenges such as macroeconomic conditions and tariffs, Bombardier’s financial strategy for the fiscal year 2025 is considered strong. The aerospace manufacturer has been making strides in decreasing its debt and increasing revenues, with InvestingPro data showing revenue growth of 7.7% over the last twelve months to $8.7 billion, particularly in sectors that offer higher margins and require less capital, like aftermarket services and defense.
According to BMO Capital Markets, these efforts are expected to have a positive impact on Bombardier’s profit margins and free cash flow. The company maintains a healthy gross profit margin of 20.6% and has generated $232 million in free cash flow over the last twelve months. While acknowledging that risks have escalated, the analyst firm believes that the business jet cycle remains stable, suggesting continued demand for Bombardier’s products.
Bombardier has been focusing on these high-margin areas following its strategic exit from commercial aviation, aiming to capitalize on the more lucrative business jet market. The company’s push into defense and aftermarket services is part of a broader effort to diversify its revenue streams and bolster its financial health.
Despite the lowered price target, BMO Capital Markets’ Outperform rating indicates that the firm still sees potential for Bombardier’s stock to perform well relative to the market or its sector in the foreseeable future. This assessment comes as the company continues to navigate the complex environment of global trade and industry-specific challenges.
In other recent news, Bombardier Inc (TSX:BBDb). has been the focus of several analyst updates and market developments. RBC Capital Markets adjusted its financial outlook for Bombardier, lowering the price target to Cdn$101 from Cdn$116 while maintaining an Outperform rating. This revision aligns with Bombardier’s guidance and market consensus, particularly regarding its first-quarter EBITDA estimate of Cdn$263 million. Meanwhile, BMO Capital Markets reaffirmed its Outperform rating with a price target of Cdn$135, highlighting a gap between Bombardier’s market valuation and business fundamentals. UBS also upgraded Bombardier’s stock from ’Sell’ to ’Neutral’ and increased the price target to C$95, citing better-than-expected aircraft bookings and a $400 million settlement from Honeywell (NASDAQ:HON).
Additionally, Bombardier has benefited from a recent exemption from U.S. reciprocal tariffs, which RBC Capital noted as a significant positive development. This exemption, relating to the USMCA compliance of Bombardier’s aircraft, removes a major concern previously affecting the company’s valuation. RBC Capital continues to view Bombardier as a top investment idea, emphasizing its potential for strong cash flow growth. These recent developments have collectively painted a more optimistic picture for Bombardier, despite ongoing challenges in the market.
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