Aerospace
Bombardier’s bonds have risen sharply after two ratings upgrades in the past month. While there is still progress to be made in improving margins further and demonstrating consistent free cash flow generation, Veritas is increasingly confident in management's 2025 target achievement. Dan Fong of Veritas forecasts a TP of C$112 (24% upside). Dan estimates that its stock could be worth C$210 to C$260 over the next four to five years, representing a ~150% to ~200% gain from the current price.
Edition: 188
- 14 June, 2024
Industrials
The attractiveness of asymmetry - extreme price volatility often makes this aircraft manufacturer's shares a challenge to hold. Since the start of its turnaround journey 3+ years ago, its stock has appreciated by >350%. Along the way, however, the stock has suffered multiple significant drawdowns. Management has made significant progress in addressing liquidity, reducing leverage, improving its cost structure, operational efficiency and cash generation. Analysts at Veritas see the stock offering gains of between 125% and 220% vs. downside of ~25%. This equates to an upside-to-downside ratio of 5:1 to 9:1, which is an appealing trade-off.
Edition: 173
- 10 November, 2023
Alstom (ALO FP) France
Industrials
FCF guidance cut validates Alumbra Research’s concerns - Alumbra initiated coverage on ALO on 2nd May due to €1.7bn of excess working capital liabilities from the Bombardier Transportation acquisition that they believed would represent a significant headwind to the group’s FY24 FCF. Last week, the stock crashed nearly 40% as management warned that FY24 FCF is now expected to be between -€750m and -€500m versus prior guidance for ‘significantly positive’ FCF and consensus expectations for FCF of €300m.
Edition: 171
- 13 October, 2023
Industrials
Unfinished business - if management can attain their longer-term objectives, shares could be worth C$4.00-C$6.00 by 2025 (vs. current price C$2.00). After unveiling its turnaround plan early this year, the group has successfully addressed near-term liquidity issues, made early progress on cost reductions, and booked several new and notable jet orders. As a result, the share price has appreciated by ~330%. In this update, Veritas reviews their original investment thesis and identifies where the company stands on key catalysts.
Edition: 123
- 12 November, 2021