Bombardier downgraded by Byron Capital

Byron Capital analyst Tom Astle Bombardier’s Q4 results were below his expectations. What’s more, he says, is there are a few real issues that the street may not be pricing into the stock.Bombardier (TSX:BBD.B) yesterday reported its Q4, 2012 and full year results. For the year, the company earned $598-million on revenue of $16.8-million, down from 2011’s $18.3-billion topline.

CEO Pierre Beaudoin, was disappointed with the results.

“Our results for 2012 are not reflective of our potential,” he said. “After proving our resilience throughout the economic crisis, today, Bombardier is at a turning point. With our outstanding backlog of $66.6-billion, an increase of 19 per cent over last year, we’re forging ahead with breakthrough products and expanding our reach in pivotal growth markets.”

Our three main drivers,” added Beaudoin, “will allow us to deliver long-term sustainable growth. The first driver is our portfolio of state-of-the-art products and services, which will be further fortified as several innovative platforms roll out of our facilities starting in 2014. The second is our expanding presence in key markets worldwide which brings us closer to our customer base, and finally, the strengthening of customer satisfaction through flawless execution on every order. These are exciting times at Bombardier and we’re on the cusp of seeing significant revenue growth. ”

Byron Capital analyst Tom Astle says yesterdays results were below his expectations. What’s more, he says, there are a few real issues that the street may not be pricing into the stock. Among these are his belief that commercial shipments of the CSeries will be delayed, and could still be two years away. He also believes paying for the CSeries will impact Bombardier’s balance sheet for years to come. As for the transportation business, Astle notes that despite the aforementioned backlog, its revenue was down 17% this past year, and the company seems to be pushing its full recovery out another year. In a research update to clients this morning, Astle downgraded Bombardier to a HOLD from his previous BUY rating, and knocked his target price down to $4.25, from his previous $4.50.

Shares of Bombardier bottomed in November after the company revealed in its Q3 report that it would miss its year-end target for the first flight of its CSeries jet by about 6 months. The stock began a recovery, however, after announcing the largest business aircraft sale in its history. The order, from Swiss-based VistaJet had a firm value of $3.1-billion, but would be worth of $7.8-billion if all options were exercised.

Shares of Bombardier closed today up .1% to $4.04.

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