U.S. stocks edge higher; solid earnings season continues
On Wednesday, RBC Capital Markets adjusted its financial outlook for Bombardier Inc (TSX:BBDb)., reducing the price target on the company’s shares to Cdn$101.00 from the previous Cdn$116.00, while maintaining an Outperform rating. The revision comes as the firm aligns its expectations with the latest guidance from Bombardier (OTC:BDRBF)’s management and prevailing market consensus. Currently trading at $60.70, the stock has shown significant volatility, delivering a 46% return over the past year despite a recent 24% decline over the last six months, according to InvestingPro data.
Analysts at RBC Capital have revised their estimate for Bombardier’s first-quarter EBITDA to Cdn$263 million, which is consistent with the market consensus of Cdn$265 million. This adjustment is based on the updated projection of 23 aircraft deliveries, a decrease from the previously anticipated 26, following the company’s guidance. Despite this change, RBC Capital’s EBITDA forecast for the full year 2025 remains unchanged at Cdn$1,625 million. InvestingPro data shows the company’s current EBITDA stands at $1.07 billion, with three analysts recently revising their earnings expectations downward for the upcoming period.
The firm has also modified its free cash flow (FCF) prediction for Bombardier, lowering it to Cdn$800 million from Cdn$900 million. This change reflects the expected investments in the supply chain due to evolving tariff policies. In conjunction with these revisions, RBC Capital has altered its target multiple for Bombardier to 6 times from 6.5 times, which resulted in the new price target of Cdn$101. According to InvestingPro analysis, the stock appears undervalued based on its proprietary Fair Value model, with additional insights available in the comprehensive Pro Research Report covering this and 1,400+ other top stocks.
Bombardier continues to be highlighted by RBC Capital as a top investment idea. The analysts underscore the attractiveness of the stock, citing a low-teen free cash flow yield based on their 2025 estimates. They believe the opportunity to compound this cash flow at a double-digit compound annual growth rate (CAGR) leading up to 2030 is not fully appreciated by the market at current valuation levels. The company maintains a healthy financial profile with a current ratio of 1.1 and has demonstrated strong profitability with a gross margin of 20.6%.
In other recent news, Bombardier Inc. has been the focus of several analyst updates and market developments. RBC Capital Markets maintained an Outperform rating on Bombardier, emphasizing its position as a top idea after a significant announcement regarding U.S. reciprocal tariffs. The exemption of Bombardier’s aircraft from these tariffs, under the USMCA compliance, has alleviated concerns about potential valuation impacts. Meanwhile, BMO Capital Markets also reaffirmed its Outperform rating, setting a price target of Cdn$135.00, and noted a disconnect between Bombardier’s market valuation and its business fundamentals. UBS upgraded Bombardier’s stock rating from ’Sell’ to ’Neutral’ and raised the price target to C$95.00, citing better-than-expected new aircraft bookings and a $400 million settlement from Honeywell (NASDAQ:HON) as key factors. UBS highlighted Bombardier’s cautious production approach and anticipated a continued decrease in leverage. These developments underscore the positive sentiment among analysts regarding Bombardier’s financial health and strategic positioning.
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