12.02
RBC CM is assuming coverage on BBD.B shares with an Outperform, Above Average risk rating and increasing its target to $6.50 (from $6). RBC CM’ view is that the worst of the economic recession is behind us – although the lag effect of the recession on aircraft deliveries continues to weigh on BBD’s valuation. However, RBC CM expects important positive catalysts to emerge in the form of: 1) a sustainable improvement in economic / corporate profitability data; 2) a pick-up in new aircraft orders; and 3) a shift in focus to F2012 estimates as we move through the down cycle expected to bottom in F2011. Finally, while Bombardier Aerospace tends to be in the spotlight, RBC CM points to the attractive stability characteristics exhibited by the company’s Transportation division and sees inherent value in that steady cash flow stream. Bombardier to report Q3/F10 tomorrow. RBC CM estimates EPS of $0.10 vs.$0.14 last year (consensus $0.09). The focus is expected to be on the aircraft division as BBD has been reducing production rates and rationalizing its cost structure accordingly.
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