Mega-investment bank Morgan Stanley has upgraded its forecasts for Copa Holdings, the parent company of the fast-growing airline turning Panama City into the “Hub of the Americas.”
Morgan raised its rating for Copa to “overweight,” saying the market “isn’t yet recognizing [the airline’s] full operating recovery potential in 2017.” Morgan upped the target price for Copa to $94 a share; it’s been trading at between $75 and $87 in recent weeks.
The Copa growth story is directly tied to Panama’s economy and real estate market. Copa now provides service to 74 destinations in 31 countries, with what the company describes as “one of the youngest and most modern fleets in the industry, consisting of 100 aircraft: 78 Boeing 737NG aircraft and 22 Embraer-190s.” That network expands to more than 150 other destinations, thanks to Copa’s code-sharing with United and other airline major airlines.
Every one of those connections increases the potential of the real estate market. Easy flight access is always cited as one of the primary reasons international buyers choose a market. Copa offers non-stop service from around the region and now it’s even easier to get in and out of Tocumen Airport and into the city, thanks to the opening of a new access road.
Copa’s shares have been soaring since last September, when it was trading closer to $40 a share. Like many airlines, Copa has had its ups and down, but the investor community clearly believes its growth and business operations are for real. In August, JP Morgan raised its price target to $93 a share and Credit Suisse upgraded the stock to “out perform.”
Meanwhile, Copa has been executing its business plan. In August, Copa reported a 13.2 percent increase in passenger traffic compared to a year earlier. For the second quarter, traffic grew 6.2 percent from a year earlier, when the airline posted earnings of 51 cents a share, well above the consensus estimates of 23 cents, according to a Zacks article entitled, “Why is Copa Holdings a Must-Add to Your Portfolio?”