The recent pullback in the valuation of Bombardier Inc. has led the Montreal manufacturer being raise to a “buy” late Tuesday at UBS.
Shares in the plane and train maker have fallen 12% since a disappointing fourth-quarter result last week and news that further production cuts for its regional jets may be a possibility in the weeks ahead.
However, Tasneem Azim, UBS analyst, notes that the shares now carry the potential of a 19% upside to her one year price target of $6.50 a share.
“We believe valuation has pulled back sufficiently to warrant our upgrade of the shares,” she said in a note to clients.
Ms. Azim said the valuation may be still negatively impacted in the near term due to a weaker-than-expected outlook.
But over the next 12 to 18 months, she said the shares offer an attractive risk-reward due to the anticipated gradual recovery of the business jet market and greater profitability in its train division.
Scott Deveau