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Investing.com - BMO Capital raised its price target on Bombardier Inc (TSX:BBDb). (TSX:BBD.B) (OTC:BDRBF) to C$185.00 from C$150.00 on Monday, while maintaining an Outperform rating on the stock. The company’s stock has shown remarkable momentum, delivering a 93% return over the past six months and trading near its 52-week high of $120.44.
The Canadian business jet manufacturer is positioned to benefit from robust business jet cycle fundamentals, according to BMO Capital’s analysis.
BMO Capital noted that Bombardier has emerged as a beneficiary of rising defense spending, creating additional growth opportunities for the company.
The firm expects Bombardier’s revenue growth in coming years to be driven by segments with above-average margins, return on invested capital, and modest capital intensity.
These factors should lead to higher cash conversion and lower financial leverage for Bombardier, which BMO Capital believes will underpin further expansion in the company’s valuation.
In other recent news, Bombardier has been the subject of an updated analysis from BMO Capital Markets. The firm adjusted its price target for Bombardier shares, lowering it to Cdn$130.00 from the previous Cdn$135.00, while maintaining an Outperform rating. BMO Capital Markets highlighted Bombardier’s consistent track record of meeting or exceeding its financial plans, despite challenges like macroeconomic conditions and tariffs. The company has been actively working on reducing its debt and increasing revenues, focusing on high-margin sectors such as aftermarket services and defense. These efforts are expected to positively impact Bombardier’s profit margins and free cash flow. The firm also noted that the business jet cycle remains stable, which suggests ongoing demand for Bombardier’s products. Bombardier’s strategic exit from commercial aviation has allowed it to focus on the more lucrative business jet market. The company’s expansion into defense and aftermarket services is part of its strategy to diversify revenue streams and strengthen its financial position. Despite the reduced price target, BMO Capital Markets’ Outperform rating indicates confidence in Bombardier’s potential to perform well relative to the market or its sector.
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