One of the last things I said about Copa Holdings (CPA) in my last article on the company
was that "adverse forex and higher fuel costs could get worse before
they get better", and those twin headwinds are primarily responsible for
another 5% decline in the share price since the time of that article.
What's more, management's recent investor day offered up a lot of
evidence to support a "soft" guidance reduction for the second half of
the year - in other words, investors shouldn't be surprised to see some
weakness in the third quarter results and some downward margin guidance
for the fourth quarter.
It's tough to recommend a
stock while expectations are still moving down, particularly when sector
valuations are generally predicated on the next 12 months' financial
performance. I don't think Copa is the greatest idea out there for
investors who need a quick gain and/or who can't or won't accept
near-term losses for longer-term gains. On a longer-term basis, though, I
continue to believe the valuation is pretty interesting and even those
investors not willing to accept the risks and uncertainties today should
keep a closer on this one for signs of stabilization over the next
three to six months.
Continue here:
Turbulence Still Hitting Copa Holdings Hard
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