The TSX’s great start this month signals a new buying season. Canada’s main stock index hit a one-month high at the close on May 2. Trade tensions could likewise ease in the coming days as Canadian Prime Minister Mark Carney prepares to meet with U.S. President Donald Trump for tariff negotiations.
I said buying season because, despite the surge, a magnificent Canadian stock trades at a discount. Bombardier (TSX: BBD.B) is a screaming buy today. At $85.76 per share, the industrial stock is down -12.3% year-to-date. However, a breakout is imminent following the strong results in Q1 2025.
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Business aviation industry leader
Bombardier designs, builds, and maintains various aircraft, including business jets and regional airliners. The $8.4 billion aerospace manufacturer and transportation equipment company is the acknowledged business aviation industry leader. Market analysts raised their price targets for BBD.B, notwithstanding the tariff uncertainty and potential impact on the business.
On April 30, 2025, Bombardier released its guidance for the year. According to its President and CEO, Éric Martel, there’s a new wave of confidence due to clarity on U.S. tariffs. The company forecast jet deliveries to exceed 150 this year compared to 146 in 2024.
Bullish sentiments
National Bank of Canada Financial Markets analyst Cameron Doerksen raised the price target from $107 to $115 per share, citing increased confidence in the tariff situation. Bombardier is not subject to tariffs because it fully complies with the Canada-United States-Mexico Agreement (CUSMA).
James McGarragle, an RBC Capital Markets analyst, raised the price target to $108 from $101 due to much better traction and business activity. “As clarity surrounding the aerospace outlook increases, we continue to see the upside as significant and flag Bombardier as our top investment idea,” he said.
Besides the new opportunities emerging in the shifting geopolitical landscape, Martel is confident that Bombardier will benefit from increased defence spending. He also notes the positive sentiment towards Canadian companies.
Double-digit increases
Increased deliveries and sustained services growth were the revenue drivers in Q1 2025. In the three months ending March 31, 2025, revenue and adjusted net income climbed 19% and 54.5% year-over-year to $1.5 billion and $68 million, respectively. Aircraft delivery for the quarter was 23, three more than in Q1 2024. Notably, the Services business rose 4% to $495 million compared to a year ago. Bombardier’s total backlog at the quarter’s end was $14.2 billion, while available liquidity was $1.4 billion.
During the first quarter, industry indicators like flight hours, new aircraft deliveries, and pre-owned inventory levels remained positive amid the economic uncertainty. “We have come a long way by focusing on what we control, and have everything in place to guide for a strong year in 2025 with an increase in revenues and free cash flow,” Martel said.
Strong growth in 2025
Management projects another successful year ahead due to higher year-over-year top and bottom-line targets. The more than 150 aircraft deliveries, improved revenue mix, higher pricing, and continued growth in Services should result in over $9.3 billion in revenue in 2025. Its free cash flow guidance is between $500 million and $800 million from $232 million in 2024. Bombardier is a screaming buy for its strong fundamentals and long growth runway.
