Bombardier Inc. provided a one-two punch of good news for its shareholders this week, releasing better-than-expected first-quarter results as well as a long-awaited new order for its C Series aircraft.
Analysts are impressed, particularly as the strong quarter was achieved in the midst of a difficult environment for aerospace.
Earnings per share of 12 cents was a couple of cents ahead of consensus forecasts, while the firm order for 10 C Series aircraft to Sweden's Braathens Aviation ended a sales drought since February of 2010. Now the focus turns to the Paris Air Show later this month, and whether Bombardier can deliver more sales wins.
"We believe there are reasons for optimism on Bombardier," commented TD Newcrest analyst Tim James in a research note today. "The business jet market appears to be turning the corner, we expect Transportation to resume its growth trajectory this year, and there are potential positive catalysts in the form of regional aircraft and C Series orders."
But, he cautioned, there is risk for investors if the company does not generate "a sufficient, and significant," number of new orders.
Canaccord Genuity analyst David Tyerman believes Bombardier results have the potential to improve markedly in 2012 and beyond, citing the strong outlook for business jets. "We continue to recommend buying BBD to participate in BBD's significant rebound potential," he said.
National Bank Financial analyst Cameron Doerksen believes the stock will likely move higher in the near term providing that additional orders are announced at the air show.
Upside: TD Newcrest maintained a "hold" rating with an $8 (U.S.) price target. Canaccord Genuity raised its price forecast by 25 cents to $9 (Canadian) and maintained a "buy" rating. National Bank reiterated its "outperform" rating and $8.50 price target. CIBC World Markets raised its price target by 25 cents to $8.50 and maintained a "sector outperformer" rating.
Trinidad Drilling Ltd. shares are up 60 per cent year-to-date and are now trading at a premium to the company's peers based on estimated 2012 earnings, said Canaccord Genuity analyst John Tasdemir. While he believes the outlook is still positive given strong rig activity levels, he believes Street share forecasts are too high and downgraded Trinidad to "hold."
Upside: Mr. Tasdemir raised his price forecast to $11.25 after tweaking his 2012 earnings forecasts.
Chorus Aviation Inc. , the holding company that owns Jazz Aviation, reported stronger-than-expected operating results to start 2011, due in part to a new contract with Thomas Cook, noted TD Newcrest analyst Tim James. While Chorus "is clearly making progress working through a period of sub-standard margins," Mr. James believes labour contract negotiations at Air Canada will overhang the share price in the short term.
Upside: Mr. James raised his 12-month target price by 50 cents to $5.50 and maintained a "hold" rating.
Rio Novo Gold Inc. has acquired the Toldafira gold project in Colombia at a cost of about $10 (U.S.) per ounce, doubling the company's resources to about 1.8 million ounces. "The low cost of entry into an advanced and prospective exploration target demonstrates Rio Novo management's capabilities," said Jennings Capital Inc. analyst Ryan Walker.
Upside: Mr. Walker raised his 12-month price target by 25 cents to $3.50 and maintained a "speculative buy" rating.
Descartes Systems Group Inc.'s fundamentals remain "exceptional," Versant Partners analyst Tom Liston declared after the software firm reported fiscal first-quarter revenue growth of 27 per cent year-over-year and EBITDA gains of 45 per cent. "We strongly encourage buying on the back of the company's continued outperformance," he said.
Upside: Mr. Liston raised his one-year price target by 25 cents to $9.75 (U.S.)
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