Shares of Bombardier (TSX: BBD.B) have been heading higher and higher over the last few years. It’s something that investors just a few years ago may have never thought possible. And yet here we are, with Bombardier stock climbing a whopping 33% since October 2023.
But is the stock still a buy with more room to fly higher? Or are there some fears investors should watch for?
Lower rates, higher use
Analysts have weighed in on Bombardier stock and its future in a declining interest rate environment, and have come out on the positive side. The stock is now one of many analysts’ favourites for 2024 and beyond.
At this rate, Bombardier only needs 46 bookings before the end of its fiscal 2023 year. During the fourth quarter, the company already achieved a 12-jet order, which has hit 25% of those booking needs.
Furthermore, its Challenger 3500 continues to sell well, even though it’s now a few years old. Even so, this also proves positive for the future. These older models should indeed sell for a lower price while Bombardier stock’s new G700 will certainly see an increase in sales as well.
Revival end nowhere in sight
The continued increase in demand for the company’s business jet aircraft shows that Bombardier made the right choice selling off its other assets. The focus on these bizjet deliveries has resulted in a strong guidance outlook from both management and analysts alike.
“We do not believe BBD is close to the end of its revival process,” one analyst stated. “We see greater contribution from aftermarket and defence growth….This suggests strong investor appetite for the sector and signals that some multiple expansion for BBD could be in the cards as it reduces its risk profile and continues to expand its manufacturing and servicing capacity.”
Furthermore, analysts believe management continues to be “well on track” to not just meet but indeed exceed its 2025 targets. This has led to multiple increases in share price forecasts, with the average currently at $77.82. This would create a potential upside of 45% as of writing.
But nothing is perfect
There, of course, are some reasons to be wary about the immediate future at least for Bombardier stock. Supply-chain issues persist in the industry, and therefore making sure deliveries arrive on time could be a drawback for the company.
Furthermore, the stock has already seen an incredible amount of growth. So it’s not clear how much longer that can last, even as it achieves the levels it hopes for. Add into this a delay in the approval of its G700, and there might be a bit of turbulence in the near future.
Even so, Bombardier’s move to focus on bizjets for the foreseeable future remains a strong one. There continue to be more opportunities, especially in a lower interest rate environment. So if you’re looking to get in on Bombardier stock these days, it’s certainly a buy for now. At least through 2025, as the stock edges higher towards its consensus price target.
