Bombardier will benefit from this “generational shift”, Stifel says

Stifel analyst Daryl Young says Bombardier (Bombardier Stock Quote, Chart, News, Analysts, Financials TSX:BBD.B) is at a transition point after completing a five-year turnaround, with defence, services and free cash flow now supporting the next leg of the story.

As reported by The Globe and Mail, in his July 2 report, Young initiated coverage of Bombardier with a “Buy” rating and $390.00 target.

The average target is $321.72.

Young said Bombardier is “poised to benefit from the generational shift in defence spending,” with its aircraft well-suited for NATO countries. He also sees upside to $550 per share if the current industry backdrop remains stronger for longer and earnings grow 15% annually through 2030.

“Bombardier is at the sweet-spot in its capex/aircraft development cycle, providing significant FCF and capital allocation optionality,” Young said.

He said the private aviation market remains healthy, supported by a new cohort of flyers, fleet and charter growth, disciplined OEM production and multi-year backlogs. Bombardier has a record $20-billion firm backlog, plus more than $12-billion in option orders, supporting a production ramp to more than 180 aircraft annually.

He said Bombardier’s services business adds growth and stability. The company captured 50% of its in-service fleet in 2024 and is moving toward a 70% goal. Young said service demand should benefit from high-use fleet operators, a growing mix of larger aircraft and future defence demand.

“Services bring more than 20% EBITDA margins and more resilient/recurring revenues through the cycle with minimal capital requirements,” Young said.

The analyst  also said Bombardier reached an inflection point in 2025, reporting $1.1-billion in free cash flow after manufacturing improvements and debt reduction.

Young said Bombardier is harvesting its investment in the Global 7000/7500 platform, with no new clean-sheet aircraft expected before 2030. He forecasts more than $6.0-billion of cumulative free cash flow by 2030, with potential use for service-network expansion, acquisitions, dividends or buybacks.

“We think a dividend and/or share repurchase program are imminent,” he said.

At 14.4 times 2027 EBITDA, Young said Bombardier has already re-rated, but he believes more than 15% EPS growth to 2030 and a rising mix of services and defence revenue justify the valuation.

-30-