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The Market Isn't Recognizing Copa's Recovery Potential: Analysts Raises Target From $56 To $94

Shares of Copa Holdings, S.A. CPA 7.79% rose more than 4 percent after Morgan Stanley upgraded the stock to Overweight from Equal Weight saying the "market isn't yet recognizing its full operating recovery potential in 2017."

The brokerage noted that the earnings would benefit from macro stabilization, improved traffic/load factor, capacity discipline and cost controls.

"Although we expect 2016e numbers to come in near the mid range of guidance, our 2017e forecasts are significantly above consensus and we don't think the market is recognizing its full potential for a meaningful RASM recovery next year (helped by a low base)," analyst Josh Milberg wrote in a note.

Milberg expects Copa's 2016 yields to fall 10 percent from last year and 30 percent from where they were five years ago. However, Milberg expects yields to rise 5 percent in 2017, with 6 percent increase in RASM, given expected improvement in macro environment.

The analyst also raised his price target to $94 from $56.

At time of writing, shares of Copa rose 4.39 percent to $83.00.

DateFirmActionFromTo
Sep 2016Morgan StanleyUpgradesEqual-weightOverweight
Aug 2016JP MorganMaintainsNeutral
Aug 2016Goldman SachsMaintainsNeutral

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