Bombardier Tries to Soothe the Market at Its Investor Day

Bombardier’s stock has dropped nearly 50% over the past three months due to weak cash flows for 2018 and 2019. At its investor day, management sought to alleviate concerns by confirming its 2020 targets, and it showed normalized cash flow metrics in an attempt to demonstrate that it remains on track. For all the focus on transportation's working capital, we think most of the risk sits in the business aircraft now due to the Global 7500 ramp. And debt maturities in 2020 and 2021 mean management doesn't have much room for error. We continue to forecast management hitting most of its 2020 targets in our base case, but we did reduce cash flows slightly for Bombardier, which knocked 5 cents off our fair value, which now stands at CAD 4.