Benoit Poirier of Desjardins Securities said such a transaction would generate proceeds to fund aerospace development programs like the CSeries jet for commercial airlines and refocus Bombardier as a "pure-play aerospace player."
He added that a deal to separate Bombardier's rail and aerospace businesses would signal to investors that the new management team headed by Alain Bellemare isn't afraid to make big strategic decisions.
Bombardier's shares (TSX:BBD.B) surged more than seven per cent in early Friday morning trading. They were up 5.77 per cent or 15 cent at C$2.75 later in the session.
Bombardier's stock — usually one of the Toronto market's most active issues — has plummeted to a low of $2.26 amid poor results, suspension of its dividend and delays in its CSeries commercial jet.
The US$5 billion reported value — equal to US$2.24 or C$2.80 per share — is above analyst estimates.
By Poirier's calculation, the rail division could be worth roughly US$4.6 billion, or between US$1.57 and US$1.96 per share
Walter Spracklin of RBC Capital Markets pegs Bombardier Transportation's value at US$3.47 billion or US$1.45 per share. However, he said the value could be higher depending on how interest, taxes and debt are divided between the two divisions.
Spracklin noted that Bombardier said in February that it would explore initiatives to reduce debt but the analyst said he was would be surprised if the company proceed without a chief financial officer (the current CFO's retirement was announced Thursday) and a CEO that's is only two months on the job.
"More likely, the company is proceeding with an analysis exactly as it said it would do on Feb. 12. As a result we do not view this news as material," Spracklin said
Bombardier spokeswoman Isabelle Rondeau said the company wouldn't comment on a Reuters report, which cited several unidentified sources saying Bombardier was working on a deal that could be worth up to US$5 billion..
"We just finished a very successful financing plan (and) we're in no rush to do a fire sale," she said in an interview. "We want to make sure we will create value for the shareholders."
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