Bombardier Earnings: Disappointing Guidance Overshadows Solid Performance in 2023

Narrow-moat Bombardier finished the year with strong fourth-quarter results but followed it up with disappointing guidance for 2024. Full-year revenue of $8 billion and adjusted EPS of $3.94 both surpassed consensus estimates and were above what we originally baked into our forecast. However, Bombardier noted that it is still experiencing supply chain issues in certain areas and issued 2024 free cash flow guidance well below what investors expected. Shares were trading down 13% by midday. Our long-term thesis has not materially changed, and, after adjusting for a shift in delivery mix and working capital cadence, we raised our fair value estimate to CAD 90 from CAD 82 per share.