Versant Partners: CSeries Jets Could Transform Bombardier

The much-discussed Bombardier Inc. (BDRAF.PK) CSeries family of jets with 110 to 130 seats may still be waiting for final approval from the company’s board later this year, but marketing to airlines is well under-way with some like Lufthansa (DLAKY.PK) and Qatar Airways considering major purchases.

Meanwhile, rivals Airbus SAS and Boeing Co. (BA) are both pushing new narrowbody development programs, which presents an opportunity for Bombardier to enter the low end of this robust market, according to Versant Partners analyst Cameron Doerksen.

When the CSeries was unveiled nearly four years ago, he, like others, was not very optimistic about its prospects. But the analyst has grown more bullish in recent months and sees a much better business case for the aircraft now, particularly because sharply higher fuel prices have made the CSeries more economically attractive.

“If Bombardier launches the program, we see the potential for the CSeries to become a significant driver of the stock in the coming years,” Mr. Doerksen told clients in a note, adding that it could transform the company.

In the near term, however, a successful launch and a healthy number of new orders could also provide a boost for the stock, he noted.

If Bombardier does launch the CSeries and is able to make its first delivery as planned in 2013, the analyst said this would give it at least a four-year first-mover advantage over Airbus and Boeing.

Mr. Doerksen said:

There are numerous airlines that would like to have an all-new, more fuel efficient narrowbody right now and may not be willing to wait until the end of next decade for the Airbus and Boeing offerings.

He reiterated his “buy” recommendation and C$7.80 price target on Bombardier shares.