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On Wednesday, RBC Capital analysts adjusted their financial outlook for Bombardier Inc (TSX:BBDb). (BBD/B:CN) (OTC: BDRBF), lowering the price target to C$130 from C$133. Despite this change, the firm maintained its Outperform rating on the company's stock. According to InvestingPro data, Bombardier (OTC:BDRBF) has shown remarkable strength with a 61.1% return over the past year, though recent price movements have been volatile. The company maintains a "GOOD" overall financial health rating.
The revision comes as RBC Capital's analysts hold steady their fourth-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) estimate for Bombardier at C$517 million, aligning with the consensus of C$518 million.
The analysts have also made slight adjustments to their 2025 projections for EBITDA and free cash flow (FCF), now expecting C$1,625 million (previously C$1,680 million) and C$900 million (previously C$942 million), respectively. These revisions are attributed to lower margins anticipated due to ongoing supply chain challenges. Investors should note that Bombardier's next earnings report is scheduled for February 6, 2025, which could provide crucial updates on these projections.
Bombardier's financial targets for 2025, which include EBITDA of over C$1,625 million and FCF of over C$900 million, are anticipated to be reaffirmed by the company's management during the fourth-quarter earnings call. RBC Capital's target multiple for Bombardier remains at 7.1 times, which underpins the new C$130 price target.
The analysts at RBC Capital continue to endorse Bombardier as their top pick, citing the company's potential for a double-digit free cash flow yield based on their 2026 estimates. They also highlight the opportunity for Bombardier to compound its free cash flow at a double-digit compound annual growth rate (CAGR) through to the year 2030, a prospect they believe is currently undervalued in the market. This assessment aligns with InvestingPro's Fair Value analysis, which indicates the stock is currently undervalued.
In other recent news, Bombardier has been in the spotlight due to its impressive financial performance. The company's fourth quarter results for 2024 are expected to meet or surpass financial targets, according to BMO Capital Markets. Their confidence is reflected in an increased stock price target from Cdn$129 to Cdn$135. Similarly, CIBC (TSX:CM) analyst Kevin Chiang also raised the stock price target to C$132.00, maintaining an Outperformer rating on the stock.
Bombardier's third-quarter earnings revealed total revenues of $2.1 billion, a 12% rise from the previous year, with service revenue reaching a record $528 million. Adjusted EBITDA also increased by 8%, amounting to $307 million. The company's Free Cash Flow (FCF) target for 2024 is projected to be between US$100 million and US$400 million, as highlighted by both BMO Capital Markets and CIBC.
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