Bombardier Inc. is expected to resume flight testing for the CSeries in early September after months of delays, a development that could boost its shares, says AltaCorp Capital.
The CSeries was grounded in late May after an engine fire and has not flown since, raising concerns that Bombardier would be forced to further delay the jet’s entry-into-service date.
AltaCorp analyst Chris Murray said new, revised engines from Pratt & Whitney continue to be delivered to Bombardier and installed on the first four flight-test vehicles.
Bombardier has been saying flight tests would resume “in the coming weeks” almost since the engine fire first occurred, but Mr. Murray said it appears those tests are finally just around the corner.
“We believe a resumption of flight testing and further clarifications from the company could provide a catalyst for share prices,” he said in a note.
The company said it still expects the smaller version of the CSeries to enter into service by the second half of 2015, but Mr. Murray said any further delays could push that into 2016.
Bombardier’s financial performance has troughed and should steadily improve over the coming years, he said, adding that its valuation discount relative to its peers offers a “highly attractive entry point.”
AltaCorp rates Bombardier as outperform with a $5.50 price target.
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