Bombardier Inc. has put the worst behind it and new orders for that CSeries are going to start rolling in, therefore the \”deep negative sentiment\” reflected in the stock prices are no longer warranted, based on a new analysis by RBC.
Analyst Walter Spracklin on Wednesday upgraded Bombardier to outperform from sector perform and raised his target price to $3.50, approximately 40% above in which the stock happens to be trading.
Bombardier\’s shares have lost about 40% of the value so far this year as cost overruns in the CSeries jetliner program raised liquidity concerns and forced the company to make some tough decisions, including replacing its chief executive, suspending its dividend and pausing development of a new Learjet.
RBC\’s optimistic outlook puts it within the minority. Bombardier\’s stock has six buy ratings, 12 holds and five sells, based on Bloomberg data.
Mr. Spracklin gave three good reasons for his upgrade of Bombardier.
On would be that the company recently completed a $2.4-billion capital raise (although $1.1 billion of that was a public equity offering that also needs to be approved by shareholders inside a vote scheduled for Friday).
\”Following the recent capital raise, Bombardier now has $6.2 billion in cash and available credit,\” Mr. Spracklin said inside a note to clients. \”Based on our analysis, this means that Bombardier presently has more than sufficient liquidity to launch the CSeries aircraft.\”