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A full-size model of the Bombardier C Series aircraft. (Paul Chiasson/The Canadian Press)
A full-size model of the Bombardier C Series aircraft. (Paul Chiasson/The Canadian Press)

Investors bet against Bombardier ahead of earnings Add to ...

Inside the Market's roundup of some of today's key analyst actions

Interest in shorting Bombardier Inc. stock has surged in recent weeks, likely reflecting investors taking bets that the company will announce a delay in its C Series aircraft Wednesday as it reports quarterly results, according to analysts at UBS.

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Bombardier’s short interest as a percentage of total shares is now 2.98 per cent, a rise of 14 per cent in the last two weeks of October, noted UBS. The stock rose 3 per cent during that same period.

For October as a whole, the short position in Bombardier skyrocketed 47 per cent.

“We believe the increase in shorts is a reflection of the uncertainty surrounding the C Series first flight and anticipation that the company will announce a delay when they release results on Nov 7,” UBS said in a research note today. “We think a three- to six-month delay is largely expected at this stage and is already priced in.”

The 100-seat transcontinental airliner was originally promised by the end of this year. But expectations are now so heavily weighted toward a delay that the only question is how late in 2013 the inaugural flight will happen.

(For a preview of Bombardier’s earnings Wednesday, see this story from the Globe’s Sean Silcoff and for full details on the latest TSX short positions, see our Eye on Shorts posting.)

Upside: UBS maintained a $5.50 price target and “buy” rating on Bombardier.

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Silver Wheaton Corp. may have missed third-quarter forecasts because of an inventory buildup, but the miner “continues to offer investors above-average exposure to the silver price and strong margins with a largely fixed cost structure,” according to Raymond James analyst Brad Humphrey.

“While Silver Wheaton missed our expectations and street estimates this quarter, the stock only sold off 1-2 per cent as many investors likely understand the fact that the inventory build-up is poised to reverse in subsequent quarters, positioning the company for improved results on stronger silver sales,” he wrote in a research note. “We believe weakness in the stock presents an opportunity to add to positions.”

Upside: Mr. Humphrey raised his target price on the stock to $48 (U.S.) from $45.50 and rates the stock “outperform.”

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Zillow Inc.’s third-quarter results were “messy on the surface and strong underneath,” presenting the U.S. real-estate database operator’s investors with a buying opportunity, said Canaccord Genuity analyst Michael Graham.

“We believe management is trading short-term profits for a stronger long-term competitive position against a very large market opportunity,” he wrote in a report. “We believe the core business is very healthy and improving.”

Downside: Mr. Graham lowered his price target to $45 (U.S.) from $50 and rates the stock “buy.”

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Cantor Fitzgerald Canada analyst Tom Liston has initiated coverage of Absolute Software Corp. with a “buy” rating. While the company faces a “perfect storm” of near-term headwinds, including delays related to Window 8 PC purchases and the “fiscal cliff” risk in the U.S., its stock price reflects this uncertainty, he said.

Upside: Mr. Liston set a price target of $6.

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The uranium market “has clearly moved deeper into the bearish territory,” with spot prices trading at levels not seen since before March 2010, long before the Fukushima nuclear disaster, points out Dundee Securities analyst Dave Talbot. He tempered his outlook for Uranium Participation Corp. as a result, adding that “near-term fundamentals suggest a bumpy ride through to year-end, as uncovered demand appears to be at about half the level of available supply.”

Upside: Mr. Talbot cut his price target to $7.50 from $9.40 but reiterated a “buy, high risk” rating.

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For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities

 
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