Bombardier Inc. (TSX:BBD.B) plunged on Thursday after the Canadian aerospace and transportation company said it cut its full-year profit forecast. The Montreal-based company said it slashed its full-year revenue forecast as well. On the news, the BBD.B stock fell nearly 20% on the TSX.
Here’s what we know.
Bombardier 2019 Outlook Slashed
According to Bombardier, the forecast cut is the result of production challenges, namely in its railcar-making unit. As a result, Bombardier now forecasts its total revenue in 2019 to come to $17 billion. For perspective, this is nearly $1 billion lower than it originally forecasted.
The Canadian company also slashed revenue for its commercial aircraft unit to $1.15 billion. Again, for perspective, this means Bombardier cut revenue for this business by $250 million. To make matters worse, Bombardier now says it forecasts to deliver 30 commercial planes this year, rather than the forecasted 35 planes.
Looking at these figures, it’s not surprising that Bombardier plunged like it did today. In fact, Stephen Trent, an analyst for Citi, said today’s revelation “came as a negative surprise to the market.”
Trent isn’t the only one who found today’s announcement surprising. Cameron Doerksen, a National Bank Financial analyst, called the decrease in full-year guidance “disappointing.” The market seems to agree.
In afternoon trading, BBD.B stock was down more than 18%. Now, as of 3:39 PM EDT, BBD.B stock is trading at $2.44, which means the stock is down just over 16%.
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Keep an Eye Out
It’s obvious the market was surprised by Thursday’s news, and that’s evident when you look at BBD.B stock and the words of analysts who have reported on the Bombardier 2019 outlook cut. With the cut and the company reporting Q1 earnings next week, May 2, it will be incredibly important for investors to keep an eye on BBD.B stock as it could very well continue its plunge.
What do you think about the forecast cut? Are you just as disappointed as the majority of the market? Let us know in the comments below.
Featured image: DepositPhotos © Q77photo
