Why investors may want to cool their jets on Bombardier shares, despite the good news


Bombardier president and CEO Alain BellemareTHE CANADIAN PRESS/Paul Chiasson

Bombardier Inc. shares hit a fresh three-year high after the company received a favourable ruling in a highly-publicized trade dispute, but investors may want to temper their optimism — at least until later in 2018.

The U.S. International Trade Commission’s decision clears the way for Bombardier to sell 75 CSeries jets to Delta Air Lines Ltd., eliminates the nearly 300 per cent in related duties imposed by the U.S. Department of Commerce and opens up opportunities to kick-start sales campaigns in the U.S. market.

While the roughly 20 per cent two-day surge in Bombardier shares reflects a greater anticipated earnings contribution from the CSeries, along with the possibility of a resolution of the company’s trade spat with Boeing Co., the Canadian plane and train maker isn’t out of the woods just yet.

“Though we see this as a significant short-term victory for the company, the decision is unlikely to be the last chapter in the Bombardier-Boeing dispute,” said Chris Murray, an analyst at AltaCorp Capital.