National Bank Financial hasn't changed its "outperform" recommendation or target price on Bombardier Inc. , but it has promoted the stock to its "Action List" - a relatively narrow group of stocks that it sees as the best buying opportunities.
The promotion is based on four reasons. Global airline passenger traffic continues to improve, which should translate into new orders for commercial aircraft in late 2010 or 2011.
Second, while a recovery in the market for business aircraft is still one or two years away, most of the metrics are stabilizing or showing signs of improving. Third, Bombardier has a massive backlog worth $43.8-billion (including orders for trains), which should help the company increase its earnings and free cash flow.
And lastly, analyst David Newman believes that the stock's valuation is compelling. His price target of $6.50 is based on the stock trading at 15-times estimated 2011 earnings per share, which is in line with its peers.
David Berman