UBS Analyst Raises Bombardier's Earnings Estimates

After a recent tour of Bombardier Inc.’s (BDRAF.PK) Montreal facilities, UBS analyst Fadi Chamoun says he is convinced the Montreal plane and train maker will be able to continue to improve its profitability going forward, in particular in its executive jet division.

In a note to clients he said:

Bombardier continues to make steady progress in introducing lean manufacturing and lowering business jet completion cycles times.

Mr. Chamoun raised his earnings estimate accordingly to C$0.49 a share from C$0.47 in fiscal 2009, and to C$0.61 from C$0.56 for fiscal 2010 based on better-than-expected margin assumptions.

He said he expects the Aerospace division to reach an earnings before interest and tax margin of 8.8% in fiscal 2009, up from 8.4%, and up to 9.5% in 2010, from 8.8% previously.

In addition to the company’s improved profitability, its strong free cash flow position and balance sheet “de-risking” should “serve to more than offset the negative impact of moderating aircraft orders going forward.”

Mr. Chamoun also raised his price target to C$8.75 from C$8 a share.