Bombardier has runway to recover from share price collapse, say analysts

Bombardier has runway to recover from share price collapse, say analysts
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MONTREAL — Transportation industry analysts say Bombardier Inc. is a high-risk investment that has room to grow after the recent share price collapse they called overdone.

The Montreal-based company’s shares are trading near where they were in early 2015 even though its profitability has nearly doubled.

Bombardier shares have fallen more than 60 per cent since July on concerns about its hefty debt and its ability to generate promised free cash flow.

Even with Monday’s 24 per cent rebound to $2.07, Cameron Doerksen of National Bank Financial says the selloff is unjustified, maintaining his target price at $5.50.

Given market conditions, analysts expect Bombardier will delay the repurchase of the Caisse de depot’s 27.5 per cent stake in its railway division valued at more than US$2 billion beyond the February date when it can act.

They also describe the investigation by Quebec’s securities regulator into Bombardier’s executive stock plan as “noise”, adding it could take a few months to resolve.

Companies in this story: (TSX:BBD.B)

The Canadian Press

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