Skip to main content

A Bombardier CS300 aircraft takes off during the 51st Paris Air Show at Le Bourget airport near Paris on June 15, 2015.

PASCAL ROSSIGNOL/REUTERS

Canaccord Genuity analyst David Tyerman has turned tail on his bearish call on Bombardier Inc. earlier this week.

On Monday, Mr. Tyerman cut his rating on the beleaguered stock to "sell" from "hold" and slashed his one-year price target on the company's subordinated voting Class B shares to $1.10 from $1.35. He made the move on the heels of a poor quarterly report last week and the company's announcement it was taking a $1-billion (U.S.) injection from the Quebec government to help complete its delayed, overbudget C Series airliner development program. Furthermore, Mr. Tyerman said if the federal government were to match Quebec's investment, his stock target would drop to just 60 cents (Canadian).

On Tuesday, Mr. Tyerman grounded his previous call. His new target has soared to $1.40, with a restored, turbulence-free rating of "hold." He's still got a downside target on the stock should Canada invest, but it is now $1.20, not 60 cents. Either way, it's a pretty feeble call for the one-time high-flying stock that has lost two-thirds of its value this year.

Story continues below advertisement

The reason for his change of course? Mr. Tyerman credits a "revised view of how a possible Canadian federal government investment in the C Series could play out," apparently based on subsequent discussions with Bombardier. The analyst's previously published view was that if Canada matched Quebec, the two governments would own a combined 99 per cent of the airliner project, leaving just 1 per cent of the economics of the plane for existing investors to share, and missing out on most of the upside if the poor selling plane actually becomes popular. That was based on Quebec securing 49.5 per cent ownership of the C Series program as part of its investment.

But Mr. Tyerman's revised view is that the company "will retain more of the C Series economics than in our previous target," or a one-third economic interest even if Canada were to put in a full $1-billion. He added Bombardier's economic interest in the C Series will vary depending on how much Bombardier invests in the program. We still don't know what the incoming Liberal government will do; news to follow after prime-minister-designate Justin Trudeau's cabinet is sworn in on Wednesday.

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter
To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies