Fiscal 2010 was a tough year for Bombardier Inc. and its aerospace division, with business jet deliveries down 25%. And if its aircraft delivery guidance bears out fiscal 2011 will be a tough one too, with another expected 15% decline.
Even so, Steve Hansen and Ben Cherniavsky with Raymond James are still confident about Bombardier's long-term prospects, raising the target price for the company to $6.25 from $5.25 with an Outperform rating.
"Bombardier Aerospace's delivery guidance is a sobering reminder that aerospace manufacturers continue to grapple with residual side-effects stemming from the global economic downturn," the pair said in a note Tuesday. "Notwithstanding these near-term headwinds, we continue to remain optimistic about Bombardier's prospects."
Fourth-quarter deliveries and net orders exceeded their expectations, while possible C-Series orders will be a positive catalyst. Mr. Hansen and Mr. Cherniavsky also see improvements in airline profitability and business jet utilization as the global economy recovers and credit markets return to strength.
Bombardier Transportation also remains strong, thanks to a growing demand for public transport around the world, the pair said.