Patient investors will be rewarded in the long-term by owning Bombardier shares through the full economic cycle, Raymond James reported today in newly updated guidance.
Revisiting its Bombardier investment thesis, the financial services company has increased its target price to $5.25 versus a previous $4.50 and raised its rating to "outperform" from "market perform".
Its bullish forecast for the long-term is being issued "notwithstanding near-term risks still on the horizon".
Says Raymond James: "Our cautionary view toward Bombardier over the past eight months has been largely predicated on the view that acutely distressed aerospace fundamentals, coupled with the residual fallout still facing the company's earnings profile, provided sufficient reason for investors to steer clear of the shares.
"While we continue to harbour many of these same concerns today, several factors have recently surfaced that give us reason to be decidedly more constructive on the name and its longer-term opportunities, including: incipient evidence that business aviation fundamentals are on the mend; accelerating momentum in the company's premiere transportation franchise; and most recently a precipitous drop in share price."
Continued economic challenges in the aerospace industry hit Bombardier Aerospace's fiscal second quarter earnings ended 31 July, although the Canadian airframer said it is was seeing "some signs of stabilization" in the business aviation industry.
Bombardier Aerospace, which produces both commercial and business aircraft, recorded fiscal second quarter revenues of $2.4 billion compared to $2.5 billion in the year-earlier period.
On balance, Raymond James acknowledges that further downside pressure could materialize given lingering risks. It notes, however, that at current levels, "We believe the risk-reward relationship has improved considerably."
The firm urges long-term, patient investors "to begin accumulating Bombardier shares while still near the cycle bottom".