Should you sell your Bombardier stock?

In a client note released before the bell on Jan. 19, TD Cowen analyst Tim James maintained a “Hold” rating on Bombardier (Bombardier Stock Quote, Chart, News, Analysts, Financials TSXV:BBD.B) and raised his price target to $278.00 from $203.00, above the Street average of $238.88, arguing that the company’s “unprecedented valuation expansion and resulting multiples may have staying power in 2026.”

“We think the factors driving the forward EBITDA multiple expansion of 3.8 times since moving to Hold (July/25) and driving sector and industry sentiment to new highs are sustainable in 2026,” James said. “In the absence of earnings disappointments or defence order losses in 2026 (neither of which we expect), we believe the risk of a material near-term correction in BBD’s historically strong valuation multiples is limited.”

As reported by the Globe and Mail, James acknowledged he has been “underestimating market enthusiasm” for aerospace and defence investments, as well as Bombardier’s defence exposure, which he estimates at about 10% of 2026 revenue, alongside slower but still positive and expected fundamental progress in 2025. He said investor sentiment is being supported by Canadian defence spending intentions, ongoing global military conflict, U.S. policy actions that are straining international relations, and record equity markets.

However, he said the fundamental outlook has not changed materially, noting only a 1.7% increase in his 2026 EBITDA estimate over the past 12 months and an unchanged Street consensus.

James said the risk to end-of-decade earnings potential has decreased, but upside has not increased meaningfully. While he views Bombardier’s financial progress since 2020 as “incredible” and deserving of multiple expansion, he is less convinced that recent developments fully justify the scale of valuation gains relative to peers.

James also outlined potential catalysts that could pressure Bombardier’s multiple, including a broader equity market correction or significantly negative CUSMA revisions affecting civil or aerospace and defence trade, though he said those risks are not currently embedded in his recommendation. He added that earnings disappointments or the loss of major defence orders in 2026 appear unlikely in his view.

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