Bombardier (TSX:BBD.B) stock is gradually stabilizing from the Trump tariff turbulence and gaining altitude. The stock has surged 45% since April 4, after falling 31% from October 2024. Behind this V-shaped rally is the uncertainty from the U.S. presidential election. A change in the administration brings uncertainty around government policies. The election of Donald Trump as the U.S. president means a 360-degree change.
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First comes the descent
The Canadian stock market began to descend in December as the market started pricing in the possible policy changes Trump could bring. Trump imposed tariffs on Canadian exports in February 2025, but the market had already priced in the fear. Hence, Bombardier stock fell only 6.7% after the tariff was announced and paused.
Meanwhile, Bombardier reported strong earnings, as maximum business jet deliveries happened in the fourth quarter. However, the stock continued its descent as the company did not give a 2025 outlook amid tariff uncertainty.
Then comes the recovery
On April 4, the White House clarified that goods under the United States-Mexico-Canada Agreement (USMCA) will be exempted from tariffs. This clarity removed uncertainty as Bombardier jets fall under the USMCA agreement. Fueling this growth were its first-quarter earnings and the 2025 guidance.
For 2025, the company expects to grow its revenue by 6.7% to $9.25 billion and deliver over 150 jets from 146 in 2024. Over the medium term, Bombardier expects aircraft deliveries to stabilize at 150. Hence, it will shift its focus to improving adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). This is reflected in its 2025 guidance of a 14% surge in adjusted EBITDA to $1.55 billion.
Is it too late to buy Bombardier?
Bombardier stock’s 45% rally has priced in the above guidance as the stock trades at 14 times its next 12-month earnings per share. It is one of the highest valuations in 15 months. At a $110 share price, it is too late to buy Bombardier.
The business jet maker has completed its recovery rally from the Trump tariff decline. The company launched its next-generation flagship jet, Global 8000. It is also working on new revenue streams, like defence and pre-owned aircraft. While they can drive the stock price rally, it may not be significant as investors have already priced in the earnings expectation. That explains the 14 times forward price-to-earnings ratio.
Instead of buying the stock near its peak, it would be better to wait for the stock to fall.
What could trigger a rally for Bombardier?
Even if you are looking to invest in Bombardier for the long term, it would be wise to wait for a dip, which could come during August due to seasonal weakness.
Looking at the long-term growth prospects, the company’s management plans to grow organically and through acquisitions. It has the financial flexibility to pursue acquisitions as it has been extending the next two-year debt maturity to 2030 and beyond. Moreover, the management plans to introduce share buybacks and dividends once cash flows stabilize. Updates around acquisitions and shareholder returns programs could drive the stock upwards.
In summary, Bombardier has robust fundamentals and strong growth, but the $110 price may not be a good entry point. You could consider buying the stock below $100.
