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  5. BBD.B: Good morning 5i! [Bombardier Inc. Class B Subordinate Voting Shares]
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Investment Q&A

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Q: Good morning 5i! What's up, or rather down, with Bombardier stock? Why the steady declined? Thank you and have a good day.
Asked by Jessie on November 15, 2024
5i Research Answer:

BBD.B is still up 70% this year; It has had a difficult week or so in the market, with most concerns surrounding its debt. The company wants to lower its debt risk, and this is coming at a time of higher yields, even though centra banks are lowering rates. Trump's policies are also worrying investors somewhat and we are likely also seeing some simple profit taking in a cyclical stock. Bombardier's actions to extend its maturity runway are blunting refinancing risk, while a $14.7 billion backlog yields visibility beyond mid-decade. The planemaker's outlook for rising earnings and strong cash flow generation over the intermediate term are underpinned by global flight activity sustaining a strong aftermarket business, and pricing benefits for aircraft sold for delivery next year. These factors can extend financial-risk gains, with balance-sheet leverage that could approach 4x at year-end on an unadjusted basis, or about a turn higher on a rate-adjusted basis. This may also result in excess liquidity rising well above target to begin next year, assuming it doesn't draw on a revolver upsized to $450 million post quarter-end.