A number of airline stocks soared up before the pandemic, only to come crashing down. Yet Bombardier (TSX: BBD.B) wasn’t one of them. Bombardier stock had been going through a fairly rough road, and was in the midst of selling off most of the business that didn’t revolve around its business jet airlines.
Yet the move proved worth the sale. During the pandemic, private planes surged in use. Bombardier proved to investors that it made the right move, with more and more orders for its jets coming in.
So today, let’s look at why Bombardier stock is still a great buy, even after surging so far over the last few years.
The recent past
Now that we’ve glazed over the last few years, let’s get into what Bombardier stock has been doing lately. The company has been pushing out its new jet aircrafts over the last few years, with demand remaining strong.
Most recently, Bombardier saw its revenue rise 8% year over year in the second quarter as demand continued for its business jet deliveries. Revenue came in at $1.7 billion in the last three months ending on June 30, up from $1.6 billion the year before.
Its net income, however, was at a second-quarter loss of $35 million. It was still far down from the $129 million loss the year before, coming from professional fees related to the sale of its rail business back in 2021.
Earnings were at $0.72 per share, which were lower than analyst estimates from Refinitiv at $0.74 per share. Yet with higher revenue and sustained demand, management remained confident that it would continue to bring in high numbers. Even amidst supply-chain issues.
More to come
Management for Bombardier stated that the company forecasts to deliver 138 business jets by the end of 2023. Earnings came in strong during the last quarter thanks to the delivery of 29 jets, with a large leap in income from repairs and parts replacements as well. These came in for the around 5,000 Bombardier plans that continue to soar through the skies.
The combination of revenue options have remained strong for the stock, and should continue in the future. At least, that’s what analysts believe. Through 2025, analysts believe the stock should exceed 2025 targets with strong demand in the business jet market area. Currently, it has more upside than downside, in the words of one analyst.
Between now and 2025, analysts expect the continued increase in business jet demand to climb. Especially as a trend towards using fleet operators rather than personal ownership allows for more privacy, while still experiencing the personal jet experience.
Flight activity is now up about 40% to 50% compared to 2019 levels, according to one analyst. Activity has slowed to around 5% to 6% in the most recent quarter, but is due to climb back to historic averages of between 11% and 14%.
When this happens, this will likely lead to a further surge in demand for the airline. Therefore, right now, the company’s guidance may be on the conservative side. There indeed could be 100% upside potential, with one analyst reiterating a very bullish stance at a $100 price target.
Bottom line
Shares of Bombardier stock are still up 67% in the last year, though down 18% since reporting the recent loss. Analysts now believe is a great time to jump in on this soaring stock. Especially before it bounces back towards all-time highs once more.
