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Analysts upbeat on Bombardier ahead of earnings

Geopolitical and macroeconomic risks abound, but analysts are expressing confidence in Bombardier Inc. ahead of its fourth-quarter earnings report on Thursday.

The airplane and train manufacturer has faced a prolonged slump but recently made some strong wins in the business jet segment, particularly after the deal earlier this month for 50 firm orders with NetJets Inc.

Canaccord Genuity analyst David Tyerman suggests strong aircraft deliveries in the quarter may produce stronger-than-projected margins and create optimism that its aerospace division will see a more rapid recovery. There may also be room for upside surprises in sales and margins at Bombardier Transportation, its rail division, given a strong backlog and recent significant new orders, he suggests.

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"We expect solid fourth-quarter 2011 results, continued positive outlook commentary and an improved balance sheet to reinforce investor expectations for future EPS rebound and growth," Mr. Tyerman said in a note.

"We believe the results and outlook should be at least strong enough to support the current share price and possibly deliver an upside surprise."

CIBC World Markets Inc. analyst Michael Willemse, meanwhile, is forecasting fully diluted earnings per share 1 cent better than the consensus of 11 cents. He expects continued growth in business jet demand from emerging markets and order activity for commercial aircraft to remain challenging in the first half of fiscal 2012. "However, once orders for the C-Series begin to pick up in mid-fiscal 2012, momentum in the commercial segment could improve," he said.

Upside: Both analysts recommend buying Bombardier shares. Mr. Tyerman has a $7.75 price target and Mr. Willemse $8.

Triangle Petroleum Corp. shares are undervalued for a company "with its management pedigree, liquidity and relative growth potential," said Canaccord Genuity analyst Derrick Whitfield. Triangle's acreage and development strategy should drive material net asset value growth in 2011, he maintained.

Upside: Mr. Whitfield bumped up his price target by $2 to $11.

Drilling at Alamos Gold Inc.'s Mulatos project in Mexico is uncovering new resources that will likely lead to an extended mine life, said CIBC World Markets Inc. analyst Barry Cooper. But Mr. Cooper raised his estimates for the company's capital spending and operating costs due to inflationary pressures in the industry.

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Downside: Mr. Cooper cut his price target by $2 to $26.

CML Healthcare Inc. is faced with a "confluence of headwinds" over the next six to 12 months, including underperformance at its U.S. franchise that is unlikely to see any improvement before 2012, said TD Newcrest analyst Lennox Gibbs. Meanwhile, CML's 75 cent dividend is at risk given that it equates to 88 per cent of his fiscal 2011 free cash flow forecast, substantially higher than most peers.

Downside: Mr. Gibbs downgraded the stock to "reduce" from "hold" and cut his price target by $1 to $10.

Shares in Yellow Media Inc. should recover recent lost ground on the back of the cash deal to divest Trader Corp. to private equity fund Apax Partners, said CIBC World Markets Inc. analyst Robert Bek. The $745-million deal "is positive for Yellow pages Group, as it de-levers the balance sheet, allowing the company to focus on its core directories unit," he said.

Upside: Mr. Bek has a $6.50 price target on the stock.

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