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MONTREAL - Transportation analysts say Bombardier (TSX:BBD.B) could be on the upswing after months of bad news, including a lengthy delay in the CSeries and weak earnings results.
Chris Murray of AltaCorp Capital says the aerospace division is at a "trough point" while the railway division is expected to continually improve over the next few years.
Murray set a one-year price target for the Montreal-based transportation company at $5.50 per share. That's about 40 per cent above current levels and would take the issue slightly above its 52-week high set in October.
Walter Spracklin of RBC Capital Markets also upgraded his outlook and target price. The analyst raised his target price 25 per cent to $5, with an outperform rating.
He says much of the negative news about Bombardier has already been priced in the stock, while the elevated liquidity risk is abating.
Bombardier's (TSX:BBD.B) shares was up three cents at C$3.90 Friday afternoon on the Toronto Stock Exchange.
Murray says share-price increases will be driven by earnings growth, increasing confidence with the new commercial CSeries aircraft, long-term cash flows and comfort around Bombardier's long-term prospects.
By 2015, he expects Bombardier's pre-tax operating earnings will rise 39 per cent to almost US$1.8 billion, from US$1.3 billion set last year.
He forecasts that adjusted earnings will reach 50 cents per share on $21.3 billion of revenues, up from 33 cents on US$18.1 billion in 2013. For this fiscal year, he estimates 39 cents per share in adjusted profits, US$1.5 billion of EBITDA and US$19.7 billion of revenues.
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