Copa Holdings' 'Demand Trends Stabilizing,' Buckingham Says In Upgrade

Panama City-based Copa Holdings, S.A. CPA is demonstrating revenue initiatives, demand recovery and an attractive share value, according to Buckingham Research Group.

The Analyst

Analyst Daniel McKenzie upgraded Copa Holdings from Neutral to Buy and reduced the price target from $103 to $95.

The Thesis

With continued volatility in key markets and increased competitive capacity, Buckingham trimmed Copa's 2018-2019 outlook.

After the firm downgraded the Copa Airlines parent in July, the company experienced positive booking trends, margin improvement and revenue opportunities, McKenzie said in the Wednesday upgrade note. (See his track record here.) 

A recovery in demand is in full effect, the analyst said.

" ... Booking trends have inflected positively over each of the past three weeks, which suggests that demand and pricing are stabilizing at lower levels," he said. 

Recent company updates reflect margin improvement through ConnectMiles, a new loyalty program, as well as a new management system set to begin in October, McKenzie said. 

“More specifically, management last reported that they expect to enhance various initiatives including the selling of miles, seat upgrades and second bag fees." 

Copa Holdings will host an investor day on Sept. 20, with plans to provide news on upcoming revenue initiatives, according to Buckingham.

Price Action

Copa Holdings shares were trading up 2.43 percent to $78.10 at the time of publication Wednesday. 

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