Q: Despite a proposed increase in Canada Gov defence spending, and an apparent boom in private jet craft sales, BBD.B remains generally neutral to analysts. Please may we have your assessment of this company and whether it is a hold or buy at this time ?
5i Research Answer:
Conditions have improved, but we think analyst reluctance is a legacy issue. The company really was a basket-case for close to two decades, with massive leverage and weak execution. It likely would have gone under without government support. It is in better shape now, but still has a VERY high debt load, and this can also limit interest. But, the stock is up 85% this year and certainly investors love it right now, with its exposure to defense with growing defense budgets globally. We like the company more than before, but are still cautious on its debt load, certainly. We would prefer a US defense company such as RTX over it.