MONTREAL — Investors dumped Bombardier Inc. stock for a fourth consecutive session yesterday on sentiment that the shares’ recent upswing may have been a tad premature, the Globe and Mail reports.
Montreal-based Bombardier’s stock fell $1, or 6.25 per cent, yesterday to $15 on the Toronto Stock Exchange in heavy trading.
There was no official news to account for the drop. The shares peaked at $17.30 a week ago after staging a steady recovery through November and December, then slipped to $17.09 on Monday and have continued to slide since.
The shares hit a 52-week low of $10 in October amidst the fallout from the Sept. 11 terrorist attacks and the deepening economic recession as fears mounted that airline and corporate orders for jets would plummet.
Bombardier president and chief executive officer Robert Brown has tried to reassure analysts and investors that the company will meet its revised target of 370 jets delivered by the end of fiscal 2001 (which ends Jan. 31) and the same number in fiscal 2002.
The company also made a point Wednesday of playing down the significance of plans to lay off 800 employees at business-jet operations in Arizona and Kansas, choosing instead to highlight the recall of 400 of the 2,000 laid-off workers at regional-jet plants in the Montreal area.
But there is fear in the market that Bombardier may have to once again make a downward adjustment to its 370 delivered-jets figure, said one analyst who spoke on condition of anonymity.
“There is some feeling that they won’t make the numbers, that they’re going to be cutting more jobs,” he said.
“Maybe [Bombardier] got ahead of itself” in the stock market, he added.
Mr. Brown announced last Sept. 26 that the company would lay off 3,800 aerospace workers worldwide and would need to lay off another 2,700 if there was no sign of recovery in the aircraft market in the months to come.
Andreas Hoppe, an analyst at BMO Nesbitt Burns in Montreal, said he’s confident Bombardier will come through on its forecasts and expects its fourth-quarter financial results to be in line with the Street’s consensus estimate of earnings of about 25 cents a share. His earnings per share (EPS) forecast for the year is 80 cents on a fully diluted basis.
Ted Larkin of HSBC Securities in Toronto has an 80-cent EPS target for fiscal 2001, rising to $1.10 in fiscal 2003.
“I’m comfortable with the higher valuations due to the relatively improved condition of air travel,” he said.
“Things are on the mend in the United States,” and more U.S. commercial carriers are switching to the smaller, more fuel-efficient regional jets, he added.
Bombardier said initial concerns over how the cash-strapped U.S. airlines will be able to finance orders for its regional jets have for the most part been allayed and there have been no order cancellations.
On the business jet side, however, Bombardier deliveries have slumped as companies slash spending in a climate of plummeting profits.
Bombardier is the world’s biggest manufacturer of business jets.
The company is also the world’s largest railway equipment manufacturer and makes snowmobiles, personal watercraft and outboard motors.