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How will Bombardier handle tariffs?

The entire investing world right now is trying to figure out who will be most and least affected by the U.S. tariff actions. Citi analyst Stephen Trent has trimmed his price target on one company that faces uncertainty.

Trent says it is unclear what will actually happen to Bombardier (Bombardier Stock Quote, Chart, News, Analysts, Financials TSX:BBD.B) going forward.

As reported by The Globe and Mail, the analyst February 3 maintained his “Buy” rating on Bombardier, while trimming his price target on the stock from $113.00 to $107.00.

“Although not all details are known at this time, Citi’s model assumes that Bombardier takes a ca. 20-per-cent price haircut on the ca. 60 per cent of its ‘25E-’27E Challenger jet deliveries that are U.S.-bound, and a 5-per-cent price haircut on such Global family jet deliveries, with the latter’s smaller price haircut reflecting far less demand elasticity vs. other business jets,” he wrote. “We assume no impact on the aftermarket segment, as this includes U.S.-based points of service.”

Trent says it’s still unclear how BBD will be affected, as it has manufacturing facilities in Canada, the United States and Mexico.

“In Bombardier’s case, although the company’s primary manufacturing facilities are in Canada, Bombardier has some wing manufacturing facilities in Texas, along with assembly, aerostructure and completion facilities in the U.S. and Mexico,” he added. “Of course, it is unclear whether aircraft that undergo final assembly in the U.S. still count as imported goods under the Trump Administration’s rules.”

The analyst argues that ultimately tariffs will sort themselves out and this is a good company.

“It is possible that Bombardier’s shares could find firmer ground, once the market comes to understand that the tariff impact already appears to be baked in,” he added. “We rate Bombardier Buy. On the back of successive, significant corporate re-shufflings and production adjustments, the company’s business model is more simplified. Although aerospace EBITDA generation is still recovering and the debt load remains high, the company’s efforts to boost its operational metrics and de-risk the balance sheet are trending stronger than we had anticipated.”

About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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