Copa Shares Snap Back As The Street Is Reminded Of The Strong Cost Story

Copa’s (CPA) low $70’s share price around Christmas of 2018 will probably go down in my annals of “shouda, couda, wouda”, and maybe ought to serve as a reminder to use a more compelling alert/reminder system. Anyway, while this Latin American airline’s shares had been drifting since February, the shares rebounded strongly after first quarter earnings, as management once again demonstrated its proven (but still occasionally overlooked) cost management ability and maintained a fairly benign outlook for the business, as well as reiterating some encouragement about the Brazilian market later this year.

I still believe Copa is undervalued and buyable here. There are risks that Brazil won’t recover as quickly or as strongly as hoped, and that’s likewise true for Argentina, but I believe the company has been operating well even with things as they are. With a very strong network and operating plan in place, I believe mid-single-digit revenue growth can drive high single-digit EBITDAR growth and support a fair value around $100.

Read the full article here:
Copa Shares Snap Back As The Street Is Reminded Of The Strong Cost Story

At Least A Couple More Quarters Before Copa Is In The Clear

I’ve been cautious on the near-term prospects for Copa Holdings (CPA), and holding off on buying for my own account, because of what I’ve seen as substantial near-term operating risks from challenging economic conditions in key markets like Brazil and Argentina. Those risks have continued to show themselves, with a weak third quarter and guidance leading to meaningfully lower expectations for 2019, as unit revenue and margin growth prospects seem muted for at least a couple more quarters.

And yet, I still keep this name high up on my watch list. I believe Copa is a well-run airline with a proven ability to grow capacity and manage costs effectively. Longer term, I believe the opportunities providing air service to Latin America are considerable and can support a higher share price for Copa. Fuel costs and further economic deterioration in key markets are both significant risks, but Copa could already be in a bottoming-out process.

Follow the link for the full article:
At Least A Couple More Quarters Before Copa Is In The Clear